Exchange Rate Flexibility and Economic Rebalancing in China

  • Takuji Kinkyo


China has long been accused of keeping the renminbi undervalued so that its export competitiveness can be maintained (IMF, People’ Republic of China: 2004 Article IV Consultation IMF Country Report 064/351, 2004; Bergsten et al., China’s rise: challenges and opportunities, 2009). In response to the international pressures to increase flexibility in the exchange rate regime, the Chinese government introduced a new exchange rate regime in July 2005. Under this regime, the renminbi would be managed with reference to a basket of currencies rather than a single currency of the US dollar. However, the renminbi–dollar rate is kept within a narrow band by massive official interventions in foreign exchange markets and its central rate has been allowed to appreciate only gradually.


Exchange Rate Foreign Direct Investment Real Exchange Rate Exchange Rate Regime Foreign Exchange Market 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Balassa B (1964) The purchasing-power parity doctrine: a reappraisal. J Polit Econ 72:584–596CrossRefGoogle Scholar
  2. Bergsten CF, Freeman C, Lardy NR, Mitchell DJ (2009) China’s rise: challenges and opportunities. Peterson Institute for International Economics and Center for Strategic and International Studies, Washington DCGoogle Scholar
  3. Calvo GA, Reinhart CM (2002) Fear of floating. Q J Econ 117:379–408CrossRefGoogle Scholar
  4. Cohen BJ (2008) After the fall: east Asian exchange rates since the crisis. In: Macintyre A, Pempel TJ, Ravenhill J (eds) Crisis as catalyst: Asia’s dynamic political economy. Cornell University Press, London, pp 25–44Google Scholar
  5. Clark P, MacDonald R (1999) Exchange rates and economic fundamentals: a methodological comparison of BEERs and FEERs. In: Stein J, MacDonald R (eds) Equilibrium exchange rates. Kluwer, Boston, pp 285–322CrossRefGoogle Scholar
  6. Enders W (2010) Applied econometric time series, 3rd edn. Wiley, New JerseyGoogle Scholar
  7. Engle RF (2002) Dynamic conditional correlation—a simple class of multivariate GARCH models. J Bus Econ Stat 20:367–381CrossRefGoogle Scholar
  8. Frankel J (1999) No single currency regime is right for all countries or at all times. NBER working paper 7338, National Bureau of Economic Research, MassachusettsGoogle Scholar
  9. Frankel J, Wei S-J (1994) Yen block or dollar block? Exchange rate policies of the east Asian economies. In: Ito T, Krueger AO (eds) Macroeconomic linkages: savings, exchange rates and capital flows. Chicago University Press, Chicago, pp 295–333Google Scholar
  10. IMF (2004) People’ Republic of China: 2004 Article IV Consultation IMF Country Report 064/351. IMF, Washington DCGoogle Scholar
  11. Kawai M (2008) Toward a regional exchange rate regime in east Asia. Pac Econ Rev 13:83–103CrossRefGoogle Scholar
  12. Kinkyo T (2012) De facto exchange rate regimes in post-crisis Asia. Econ Bull 32:2155–2165Google Scholar
  13. Kinkyo T (2013) Is the Renminbi appreciating fast enough? In: Kinkyo T, Matsubayashi Y, Hamori S (eds) Global linkages and economic rebalancing in east Asia. World Scientific Publishing, Singapore, pp 193–209Google Scholar
  14. Lardy NR (2012) Sustaining China’s economic growth. Peterson Institute for International Economics, Washington DCGoogle Scholar
  15. McKinnon RI (2005) Exchange rates under the east Asian Dollar standard: living with conflicted virtue. MIT Press, MassachusettsGoogle Scholar
  16. Pesaran MH, Shin Y (1999) An autoregressive distributed lag modelling approach to cointegration analysis. In: Strom S (ed) Econometrics and economic theory in 20th century: The Ragnar Frisch Centennial symposium. Cambridge University Press, Cambridge, pp 371–413CrossRefGoogle Scholar
  17. Pesaran MH, Shin Y, Smith RJ (1996) Testing for the existence of a long run relationship. DAE Working Paper, No. 9622, University of CambridgeGoogle Scholar
  18. Reinhart CM, Rogoff KS (2004) The modern history of exchange rate arrangements: a reinterpretation. Q J Econ 119:1–48CrossRefGoogle Scholar
  19. Samuelson PA (1964) Theoretical notes on trade problems. Rev Econ Stat 46:145–154CrossRefGoogle Scholar

Copyright information

© Springer India 2014

Authors and Affiliations

  1. 1.Graduate School of EconomicsKobe UniversityKobeJapan
  2. 2.Policy Research InstituteMinistry of FinanceTokyoJapan

Personalised recommendations