Impact Of The Chinese Economy And The Rest Of The World Essay

1790 Words 8 Pages
Without doubts, China is the would second biggest economy and its every small movement can affect significantly the would economy also its domestic economy. This essay analyse the impacts on the Chinese economy and the rest of the world as well, without taking unpredictable elements into account.

The figure of the exchange rate between USD and CNY with the devaluation of Chinese Yuan by 2% against US Dollar in august 2015 which continued to fluctuate up and down on approximately 6.352 (ieconomics,2015) is showed below.

This devaluation of 2% against USD is a trigger to affect Chinese economy and also the economies of the rest of the world.

The obviously advantage is the acceleration of the Chinese export that the would largest total amount of import adding export in both 2013 and 2014 (WTO,2014), which can benefit Chinese economy including many fields, such as the unemployment rate, national income and economic growth.

Because of the USD is the most currency for international trade settlement, the devaluing of CNY will lead to a decease in prices of export and commonly increase the demands of exports form China. ‘Lower export prices will in turn mean an extension in the quantity of exports demanded’ Said Mulhearn. (2001, p337). Likely, Chinese balance of trade increased from 602.36(USD hundred Million) in August 2015 to 616.4 until October 2015.

As the formula of the circular flow of income from ECONOMICS (2015, p405) W(Withdrawal)=S(Saving)+T(Tax)+M(Import) and…

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