China’s Renminbi: “Our Currency, Your Problem”?

Case Solution

Ka-Fu Wong, K.C. Fung, Ricky Lai
University of Hong Kong ()

The Chinese currency, the renminbi, is the subject of controversy between China and its trading partners (especially the United States), accusing China of manipulating its exchange rate to artificially lower its exports. They see the renminbi as an unfair weapon in international competition. Chinese officials responded that these attacks were unfounded: the renminbi was not, at least not significantly, undervalued. The bond helped maintain a stable economic environment from which all trading partners benefited. They also said that a large trade and budget deficit in the United States was due in part to capital inflows from China. The United States should focus on the weaknesses in its own economy that caused these deficits rather than treating China as a scapegoat. The officials also said that China is a sovereign country with the right to choose its exchange rate policy. From 2005 to 2007, the debate was regular in the news, and the arguments are likely to get tougher as the United States and Europe’s trade deficits with China continue to widen. This case is about business and economics, introduces the fundamentals of monetary economics, and demonstrates the practical applications of monetary policy and exchange rates that relate to business decisions.

We don‘t have the case solution, but we pay up to $50 for yours!

  • Set a reminder to receive an email after your university‘s case study deadline.
  • Upload your case study solution. We will review it for quality.
  • Get your money via PayPal or to your bank account.