(Download) "Exchange Rate and Monetary Policy in China." by The Cato Journal # eBook PDF Kindle ePub Free

eBook details

Title: Exchange Rate and Monetary Policy in China.
Author : The Cato Journal
Release Date : January 01, 2005
Genre: Politics & Current Events,Books,
Pages : * pages
Size : 228 KB

Description

By most metrics China's currency remains undervalued. Its current account surplus increased sharply over the past two years, rising from 817 billion or 1.5 percent of gross domestic product in 2001 to $46 billion or 3.2 percent of gross domestic product in 2003. China ran a trade surplus of $32 billion in 2004 compared with a surplus of about $25.5 billion in 2003. However, China's underlying current account surplus in both 2003 and 2004 is almost certainly significantly higher than the measured surplus for two reasons. First, as discussed in greater detail below, the Chinese economy recently has been growing at a record-setting but clearly unsustainable pace. High growth has stimulated an unprecedented demand for imports, which grew by 40 percent in 2003 alone, making China the world's third largest importer. In 2004 China's imports grew an additional 36 percent. When economic growth eventually slows to a more sustainable pace, it is quite likely that import growth will slow down relative to the growth of exports and China's trade surplus will widen. That was the pattern in the last macroeconomic cycle when the trade account strengthened substantially between 1993 and 1997.