China will not manipulate currency for trade advantage


The article reports the China’s recent decision not to manipulate Chinese Yuan post the ‘close monitoring’ from USA. China has made repeated pledges in the past that China never devalues Yuan to boost the Exports for favourable Terms of Trade and maintains that its  huge trade surplus is a result of growing external demand for Exports from international markets and Imports due to persistent weak commodity prices.

Topics include Depreciation, Managed Float Exchange Rate system, Balance of Payments and Effects of Depreciation on the International Trade and economic Growth of the country. Explain the causes and the expected effects of Currency Depreciation in a recessionary economy using the Exchange Rate diagrams .

Evaluation will cover effect of Balance of Payments and depleting Foreign Exchange Reserves and Current Account Deficit on the Chinese Economy with emphasis on Domestic Producers, Consumers and Government.