Chinese Currency Devaluation Analysis

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China‘s currency devaluation

The speed and size of China 's economy revolution is a trend and China has emerged as a major global economic power. It is now the world’s largest economy. (Morrison 2015) Three decades ago, China was among the poorest nations in the world. Comparing the Gross Domestic Production in China per capital against USA level was only 2.5% and Brazil level was 10%. Currently, China 's Gross Domestic Production has grown at approximately over 8 percent per year. Therefore, today comparison with China’s
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This puts strain on these countries who trade with china to devaluate their own currencies to help their own exporters and to stop weaken capital flows. If the Chinese currency is weaker compare those countries trade with china then these countries will produce less product since Chinese goods are cheaper and this will lead in the long run less manpower; rising unemployment and reducing exports. For example USA the biggest customer for Chinese goods also exports goods to China, but with a weakened Chinese currency, there is less demand for their goods (Neil Irwin). However, the big impact of this will be felt by those who compete with china in exports goods within global market. Chinese currency devaluation will make many countries product less demand such as Canada, New Zealand, Australia, South Korea, Thailand, and Malaysia. Chinese currency devaluation has double negative effect on South Korea, Thailand and Malaysia and currency devaluation in china makes for them harder to compete with China to export cheap goods to the rest of the world. (Lilian Karunungan)
Also china becomes a role model in terms of currency devaluation for many nations who export goods also oil producing countries who are struggling with low oil prices. Some of these oil producing countries started to devaluate their currencies, such as Kazakhstan and Vietnam.

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