Essay about China And The Chinese Economy

808 Words Jan 27th, 2016 4 Pages
The Chinese government has had a close and constant watch on their currency for many years. As mentioned in the readings, in 1994 the Chinese government had set a fixed rate on the value of the Yuan compared to the U.S. dollar, in addition to making it illegal to trade the Yuan outside of the boarders. Through China’s centralized government they have been able to predict and manage their economy in respects to growth and employment opportunities. Because of the stronghold control over the Yuan, the Chinese economy has been able to experience tremendous growth. This growth was contributed mainly due to the remarkable trade surplus that was a direct result of having a fixed rate with the U.S. dollar. So while other currencies across the world began to appreciate, this made Chinese imports easier to afford, because their currency would go further. Because of this, countries exploited the cheap goods and were directly contributing to the success of China in the international trading market. Soon countries across the world began to realize that the Chinese economy was benefiting from regulation of their currency and began demanding a reform on the value of the Yuan. Despite the pressure, the Chinese are skeptical to do so as it would take some control out of their hands. For a country as centralized as China, this unknown aspect of less control isn’t a desirable one. The hesitation by China to open up the Yuan makes sense as it has the potential to slow down their economy.…

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