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The Chinese RMB: Its Value, Its Peg, and Its Future

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  • Ted H Chu

Abstract

The valuation of the Chinese renminbi (RMB) has drawn lots of attention lately and a great deal of pressure on the part of developed nations for revaluation. In addressing the issue of valuation, this paper develops a new purchasing power parity (PPP) index of China's exchange rate and finds that the while undervalued, the undervaluation is neither unusual nor bad policy. Moreover, China's overall external trade balance does not seem to be that far out of equilibrium. China's desire to join the G-7 club is likely to result in abandoning its peg, however, despite the increased risk to its economic development.Business Economics (2005) 40, 7–17; doi:10.2145/20050201

Suggested Citation

  • Ted H Chu, 2005. "The Chinese RMB: Its Value, Its Peg, and Its Future," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 40(2), pages 7-17, April.
    • Handle: RePEc:pal:buseco:v:40:y:2005:i:2:p:7-17
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    Cited by:

    1. Meixing Dai, 2011. "Motivations and strategies for a real revaluation of the Yuan," Working Papers of BETA 2011-23, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    2. Meixing Dai, 2013. "In search of an optimal strategy for yuan’s real revaluation," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 11(1), pages 29-46, February.

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