Question

a. Report on the history of the exchange rate of China's currency: Was it fixed or flexible? Was it ever pegged to a major world currency? Is it currently fixed or flexible? Is it freely convertible?  

b. The United States recently labeled China a currency manipulator. Do internet research and find at least one article that argues that this is justified and another that argues that China is not currently manipulating its currency (even if it might have done so in the past). Based on your research, in your opinion, is China current actively undervaluing its currency leading to current account surplus?

c. How does the Chinese government's changing policy toward the exchange rate reflect the rise of China over the years?

d. [OPTIONAL]. Describe Shanghai's role as a financial and trading center.

Answer 1

Dear Student,

Share market tallows companies to raise money by offering stock shares and corporate bonds. It lets common investors participate in the financial achievements of the companies, make profits through capital gains, and earn money through dividends, although losses are also possible.

China does not have a floating exchange rate that is determined by market forces, as is the case with most advanced economies. Instead it pegs its currency, the yuan (or renminbi), to the U.S. dollar.

China's current account surplus has slipped from 10.3 percent of its GDP in the third quarter of 2017, to just 0.4 percent in the third quarter of 2018

Shanghai's advantage is, without a doubt, its role as the financial hub of what will be the world's largest economy, even though a lot of financial power is still concentrated in Hong Kong and Beijing. ... China's economic growth alone will therefore not be enough for Shanghai to replace existing global financial centers.

Thank You !!