The Importance Of The Global Economy

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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 …show more content…
By going international, it would allow the Chinese to not be as reliant on the U.S. dollar as it has been. This is important because if the United States economy were to ever collapse again, like it did in 2008, then the global economy wouldn’t suffer so much, because the Chinese economy would not be brought down comparatively as if the Yuan were fixed to the American dollar. Another important reason for the Yuan to become a world currency is that it gives individuals other options around the world as to where to put their money. Having more options allows less dependency on a specific currency. This is huge, because if, for example, both the euro and the U.S. dollar were to quickly be devalued the presence of the Yuan makes it possible to ensure that a global financial crisis will not ensue. Finally, it is important because it would make the market dictate the success of all economies. This would make it to where no country has a competitive advantage such as what China has had though their currency …show more content…
Too many internal pressures such as the ever-increasing Chinese population have made China rely on control to make sure that their economy grows at the same rate for future years. However, with the recent efforts to make the Yuan’s presence international, it looks like the world economy is heading in the right direction. The U.S. and Europe will be happy, because now the Yuan might soon be valued correctly, and China will be happy because they might soon have an important role in the global foreign exchange trading

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