China’s Renminbi: “Our Currency, Your Problem”? Case Solution & Answer

This Case is about EMERGING MARKETS, GLOBALIZATION, GOVERNMENT, SUPPLY CHAIN

PUBLICATION DATE: January 24, 2008 PRODUCT #: HKU710-PDF-ENG

The renminbi are perceived by them as an unjust weapon in international contest. Chinese officials reacted that these strikes were groundless: the renminbi was not undervalued, at least not substantially. The peg led to keeping a secure economic environment, which helped all economical associates. Additionally they said that, if a substantial trade and budget deficit was running, it was partially attributable to capital inflow from China. The US should concentrate on the weaknesses of its own market that created these deficits, rather than treating China as a scapegoat. Officials also said that China was a autonomous nation with the right to select its exchange rate policy. In the news, the discussion was often throughout 2005 to 2007 and it was not unlikely that disagreements would become more demanding if European trade deficits with China and US continued to grow.

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