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Currency Policies: U.S. & China

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Selected Print Resources

Burdekin, Richard C.K. China's monetary challenges: past experiences and future prospects. New York: Cambridge University Press, 2008. 260 p.
LC Call number: HG1285 .B87 2008
LC Catalog Record: 2007052907

Publisher description: Despite the People's Republic of China's remarkable growth over the post-1978 reform period, questions have arisen about the sustainability of its exchange rate policy and the soundness of its financial system. This book focuses on the key monetary challenges to China's continued advancement and addresses such topical issues as the buildup of foreign exchange reserves, monetary control, credit allocation difficulties, and the expanding role of China's asset markets and stock exchanges. Current and past monetary policy strategies are examined in detail as are the banking sector reforms leading up to full foreign competition in December 2006. The analysis also assesses the People's Republic's role within Greater China (including Hong Kong and Taiwan) and the potential for future renminbi monetary hegemony within Asia. The treatment of these issues is intended to be accessible to non-economists and does not assume prior immersion in the underlying formal models.

U.S. Trade with China

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Hanjin company container ship at port in the Port of Vancouver
Image (above):
Hanjin company container ship (Port of Vancouver)
Courtesy of Joseph Sams.

Huang, Yanfen. Money supply process and monetary policy in China. Frankfurt am Main, NY: Peter Lang, c2002. 215 p.
LC Call Number: HG1285 .H825 2002
LC Catalog Record: 2003047084
Table of Contents

The purpose of this dissertation work is to analyze the money supply process and thereby to explore the causes of the poor performance of monetary policy in China, focusing on the period from 1984 up to 1998. Huang starts with the development of financial sector and financial markets in China by explaining the reasons of why Chinese financial system is far from a modern, efficiently functioning system. The weaknesses highlighted are an underdevelopment of financial markets, especially money markets, not independent central bank and other four state banking institutions. The central theme is that the money supply has endogenous features due to the lack of an interest rate mechanism. The endogenous character of the money supply makes it difficult for PBC (People's Bank of China) to conduct monetary policy. The main conclusion is that interest rate liberalization should become the most important aspect of China's financial system reform in the future.

Laurenceson, James and Chai, Joseph C.H. Financial Reform and Economic Development in China. Cheltenham; Northampton, MA: E. Elgar, c2003. 159 p.
LC Call Number: HG187.C6 L28 2003
LC Catalog Record: 2002037930
Table of Contents

This book is a comprehensive, balanced and realistic assessment of China's financial reform program and future direction. This volume will facilitate a more accurate assessment of the Chinese approach to financial reform, and will therefore allow more informed future policy choices for both China and other developing and transitional countries. Global Books In Print.

Liew, Leong H. and Wu, Harry X. The making of China's exchange rate policy : from plan to WTO entry. Cheltenham, UK; Northampton, MA: Edward Elgar, c2007. 249 p.
LC Call number: HG3873.C45 L54 2007
LC Catalog Record: 2006037182

This book examines the major economic and political factors influencing China's exchange rate policies from the foundation of the People's Republic to the present. It considers how national, economic and political priorities, international influences, domestic and institutional interests and the new constraints imposed by China's rapidly globalising post-Mao economy determine exchange rate policy. Global Books in Print.

Morrison, Wayne M. and Labonte, Marc. China's Currency and Economic Issues. New York: Nova Science Publishers, c2006. 90 p.
LC Call Number: HG1285 .C48263 2004
LC Catalog Record: 2005037216
Table of Contents

China has a policy of pegging its currency (the yuan) to the U.S. dollar. If the yuan is undervalued against the dollar, there are likely to be both benefits and costs to the U.S. economy. It would mean that imported Chinese goods are cheaper than they would be if the yuan were market determined. This lowers prices for U.S. consumers and diminishes inflationary pressures. It also lowers prices for U.S. firms that use imported inputs (such as parts) in their production, making such firms more competitive. Critics of China's peg point to the large and growing U.S. trade deficit with China as evidence that the yuan is undervalued and harmful to the U.S. economy. The relationship is more complex... This book presents a coherent examination of the details behind China's currency policies as they relate to outside factors. Global Books In Print.

Murphy, Melissa and Yuan, Wen Jin. Is China ready to challenge the dollar?: internationalization of the renminbi and its implications for the United States: a report of the CSIS Freeman chair in China studies. Washington, DC : CSIS Press, 2009. 22 p.
LC Call number: HG3978 .M868 2009
LC Catalog Record: 2009042783

Publisher description: While China is still a long way from challenging the dollar's global reserve currency status, as the largest holder of U.S. debt, Beijing is undoubtedly nervous about the prospect of a weaker dollar and is taking steps to diversify its reserves, as well as to internationalize the renminbi. There also seems little doubt that in the next decade China will emerge as a major player in the international financial system. Given the strategic geopolitical and economic implications of these developments, this report attempts to provide a clearer understanding of what is motivating Beijing's current moves, where its policy is likely headed, and the implications for the United States.

United States. Congress. House. Committee on Financial Services. U.S. interests in the reform of China's financial services sector : hearing before the Committee on Financial Services, U.S. House of Representatives, One Hundred Tenth Congress, first session, June 6, 2007. Washington : U.S. G.P.O. : For sale by the Supt. of Docs., U.S. G.P.O., 2007. 131 p.
LC Call Number: KF27 .B5 2007j
LC Catalog record: 2007473236
Online edition: http://purl.access.gpo.gov/GPO/LPS87228 [PDF Format: 5.5 MB / 135 p.]

United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs. The report to the Congress on international economic and exchange rate policies : hearing before the Committee on Banking, Housing, and Urban Affairs, United States Senate, One Hundred Ninth Congress, second session, on the report to Congress on international economic and exchange rate policies, May 18, 2006. Washington : U.S. G.P.O. : For sale by the Supt. of Docs., U.S. G.P.O. , 2007. 32 p.
LC Call Number: KF26 .B39 2006n (Law Library)
LC Catalog Record: 2008354960
Online Edition: http://purl.access.gpo.gov/GPO/LPS91617 [PDF Format: 212 KB / 36 p.]

United States. Congress. Senate. Committee on Finance. Risks and reform : the role of currency in the U.S.- China relationship: hearing before the Committee on Finance, United States Senate, One Hundred Tenth Congress, first session, March 28, 2007. Washington : U.S. G.P.O. : For sale by the Supt. of Docs., U.S. G.P.O., 2007. 103 p.
LC Call Number: KF26 .F5 2007p Law Library
LC Catalog Record: 2008412707
Online Edition: http://purl.access.gpo.gov/GPO/LPS102186 [PDF Format: 4.4 MB / 107 p.]

Zhang, Jialin. The Debate on China's Exchange Rate: should it be revalued? Stanford,
Calif: Hoover Institution Press, c2004. 28 p.
LC Call Number: H96 .E85 no. 112
LC Catalog Record: 2004018637
Table of Contents

Publisher description: China has been under heavy international pressure to abandon its currency's de facto peg to the U.S. dollar, since the United States alleged that the undervalued Chinese currency has widened the U.S. trade deficit with China and has cost U.S. manufacturing jobs over the past few years. But the Chinese authorities argue that the competitiveness of Chinese goods comes from low labor costs rather than from the exchange rate. Meanwhile most U.S. and Chinese economists argue that at this moment a sudden rise in the yuan's value would do more harm than good for China, the US and the world economy. This is not to say that China does not need to review the yuan's valuation and its exchange rate regime. Apart from external pressure, the yuan experiences an endogenous pressure to appreciate, stemming from the huge inflow of foreign assets, current account surplus and foreign direct investment. China's foreign reserves continue to mount and its money supply has skyrocketed. Without a revaluation, these increases may lead to overheating of the economy and may fuel inflation. This is dilemma Chinese authorities face.

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Selected Internet Resources

Blanchard, Olivier, Francesco Giavazzi, Filipa Sa. The U.S. Current Account and the Dollar. University of California, Berkeley, Economics Department. May 14, 2005.
http://emlab.berkeley.edu/users/eichengr/af/giavazzi.pdf External Link [PDF Format: 457 KB / 68 p.]

"There are two main forces behind the large U.S. current account deficits. First, an increase in the U.S. demand for foreign goods. Second, an increase in the foreign demand for U.S. assets.... Our purpose in this paper is to explore these issues ...[and] to develop a simple model of exchange rate and current account determination based on imperfect substitutability in both goods and as- set markets, and to use it to interpret the past and explore alternative scenarios for the future." From the Authors' Abstract.
China's Exchange Rate Regime and Its Effects on the U.S. Economy. Hearing before the Subcommittee on Domestic and International Monetary Policy, Trade and Technology of the Committee on Financial Services. U.S. Congress. House. 108 Cong. 1st session. October 1, 2003. Washington : U.S. Government Printing Office. 2003.
http://frwebgate.access.gpo.gov/ [PDF Format: 2.8 MB / 109 p.]
Testimony on the issue of foreign currency exchange rates and their relationship to the United States economy, in particular, the relationship between the Chinese yuan and the U.S. dollar, with special emphasis on valuations of foreign currencies and the effects they may be having on U.S. export opportunities and the U. S. economy.

The Chinese Exchange Rate. The Peterson Institute for International Economics
http://www.piie.com/research/topics/hottopic.cfm?HotTopicID=3 External Link

Provides links to research materials on the topic of the Chinese Currency Exchange Rate offered by the Peterson Institute for International Economics, a nonprofit, nonpartisan research institution that studies international economic policy.

Correcting the Chinese Exchange Rate. C. Fred Bergsten, Director, Peterson Institute for International Economics. Testimony before the Hearing on China’s Exchange Rate Policy, Committee on Ways and Means, US House of Representatives
September 15, 2010
http://www.iie.com/publications/testimony/bergsten20100915.pdf External Link [PDF Format: 138 KB / 8 p.]

Currency manipulation and its effect on U.S. businesses and workers: hearing before the Subcommittee on Trade of the Committee on Ways and Means, U.S. House of Representatives, joint with the Subcommittee on Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce and the Subcommittee on Domestic and International Monetary Policy, Trade, and Technology of the Committee on Financial Services, U.S. House of Representatives, One Hundred Tenth Congress, first session, May 9, 2007. Washington: U.S. G.P.O. 2009.
http://www.gpo.gov/fdsys/pkg/CHRG-110hhrg47300/pdf/CHRG-110hhrg47300.pdf External Link [PDF Format: 1.49 MB / 136 p.]

Cyn-Young Park. "Coping with Global Imbalances and Asian Currencies" ERD Policy Brief. Asian Development Bank (ADB). May 2005.
http://www.adb.org/Documents/EDRC/Policy_Briefs/PB037.pdf External Link [PDF Format: 307 KB / 16 p.]

According to the author, "The US current account deficit is a combined result of a low private savings rate, a large fiscal deficit, and a sustained gap in growth between the US and other major industrial countries. As such, the adjustment has to come about by addressing these underlying causes." The paper is one of many resources on this official site of the ADB providing useful sources for economic and statistical research in improving welfare of the people in Asia and the Pacific.

The Dollar and Other Key Currencies. Institute for International Economics
http://www.iie.com/research/topics/hottopic.cfm?HotTopicID=5 External Link

In addition to a brief overview of the US dollar and other key currencies, this web page contains a useful source of speeches, papers, and testimonies.

Morrison, Wayne M. and Labonte, Marc. China’s Currency: An Analysis of the Economic Issues, Congressional Research Services. Report RS21625, October 2010.
http://www.fas.org/sgp/crs/row/RS21625.pdf External Link [PDF Format: 517KB / 37 p.]

The report analyzes the latest developments in China's currency reform and the effect of the renminbi appreciation on the U.S. economy.

National Bureau of Economic Research Papers
http://papers.nber.org/papers/ External Link

The NBER web site provides a wide selection of working paper series by topics. Several examples are listed below. Access to the full text of the papers is available only by purchase or subscription.

Joshua Aizenman, Yothin Jinjarak
The US as the "Demander of Last Resort" and its Implications on China's Current Account
http://www.nber.org/papers/w14453.pdf External Link [PDF format: 170KB / 23 p.]

Olivier Blanchard
Current Account Deficits in Rich Countries
http://www.nber.org/papers/w12925 External Link [PDF Format: 244 KB / 36 p.]

William H.Branson and Conor N. Healy
Monetary and Exchange Rate Policy Coordination in ASEAN+1
http://papers.nber.org/papers/w11713.pdf External Link [PDF Format: 406 KB / 47 p.]

Michael P. Dooley, David Folkerts-Landau, and Peter M. Garber
Interest Rates, Exchange Rates and International Adjustment
http://papers.nber.org/papers/w11771.pdf External Link [PDF Format: 150.5 KB / 23 p.]

Barry Eichengreen and Mariko Hatase
Can a Rapidly-Growing Export-Oriented Economy Smoothly Exit an Exchange Rate Peg? Lessons for China from Japan's High-Growth Era
http://papers.nber.org/papers/w11625 External Link [PDF Format: 334 KB / 57 p.]

Andrea Ferrero and Mark Gertler and Lars E.O. Svensson Current Account Dynamics and Monetary Policy http://www.nber.org/papers/w13906 External Link [PDF format: 438KB / 55 p.]

Jeffrey Frankel
On the Renminbi: the Choice between Adjustment under a Fixed Exchange Rate and Adjustment under a Flexible Rate
http://papers.nber.org/papers/w11274.pdf External Link [PDF Format: 228 KB / 26 p.]

Caroline Freund and Frank Warnock
Current Account Deficits in Industrial Countries: The Bigger They Are, The Harder They Fall? http://papers.nber.org/papers/w11823.pdf External Link [PDF Format: 313 KB / 48 p.]

Trade and Development Report. United Nations Conference on Trade and Development
http://www.unctad.org/Templates/Page.asp?intItemID=3742&lang=1 External Link

Trade and Development Reports by UNCTAD, an agency within the United Nations system charged with promoting "development-friendly integration of developing countries into the world economy."
U.S. International Transactions Accounts Data. U.S. Bureau of Economic Analysis.
http://www.bea.gov/international/index.htm#bop
Links to U.S. International Transaction Accounts Data from 1960 to the present. Annual, quarterly seasonally adjusted, or quarterly not seasonally adjusted data is available.

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Library of Congress Catalog Searches

Additional works on this topic in the Library of Congress may be identified by searching the Online Catalog under appropriate Library of Congress subject headings. Choose the topics you wish to search from the following list of Library of Congress subject headings to link directly to the Catalog and automatically execute a search for the subject selected. Please be aware that during periods of heavy use you may encounter delays in accessing the catalog. Please see the individual sections of this guide for catalog searches relating to those topics. For assistance in locating other subject headings which relate to this subject, please consult a reference librarian.

Banks and banking--China       Financial institutions--China
China--Economic conditions--1976-2000       Foreign exchange rates--China
China--Foreign economic relations--United States       Money supply--China
Currency question--China       Monetary policy--China
Finance--China       United States--Commercial policy

Last Updated: 11/9/2010

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