Essay on China 's Economic And Political Superpower

867 Words 4 Pages
Perhaps, only a sage meditating in a remote place would not have noticed devaluation of the Chinese Yuan (CNY). Why a minor devaluation of Yuan, of about 2%, has made so much of news? Why it is so significant? These questions can only be answered if we understand the position of China in global political and economic matters.

Having transformed itself from an impoverished communist state to an economic superpower, China has leapfrogged Japan to become the world’s third largest economy, and, now it targets to eclipse USA as world largest economy by 2025. China’s rise as an economic and political superpower is significant for two reasons- it represents China’s increased assertion as an alternative pole to USA in a unipolar world (especially after disintegration of erstwhile USSR), and, secondly, rapid growing Chinese economy has provided much needed fuel to the global economy. China has used an astute economic diplomacy to expand its domain of influence in every part of the world. It has aligned most of its policies, if not all, to this end.

Exchange rate of yuan, especially with US dollar serves as a critical input to the Chinese export oriented growth model. In 1998 (as a response to East Asian crisis) China pegged its currency to Dollar at around 8.2 Yuan per Dollar. Many countries mainly USA, maintained that Yuan was undervalued and it was hurting their trade interest. Undervaluation of Yuan was a part of Chinese strategy to expand its export and it helped it to amass…

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