Undervalued Currency:

China

Undervalued Currency:

ChinaA look at the dynamics of the Chinese

Renminbi.A look at the dynamics of the Chinese

Renminbi.

By: Adam Starr and Ryan Cortez

OverviewOverviewIs the Renminbi undervalued?

What does this do for China?

What does this mean for the World?

Why should China appreciate the Renminbi?

How do we know the Renminbi is

undervalued?

How do we know the Renminbi is

undervalued?

The Big Mac Index: China BM = $1.83U.S. BM = $3.58

Purchasing of Foreign AssetsCapital Acct + Current Acct = 0

What does this do for China?

What does this do for China?

Maintains high demand for domestic production

Keeps jobs in exporting sectors

Labor income is lower than it could be

What does this mean for the world?

What does this mean for the world?

Cheaper imports

Less competition internationally

Less consumption for non-Chinese goods

Why appreciate the Renminbi?

Why appreciate the Renminbi?

Increase the value of wages in China

To prevent trade sanctions from the US and EU

Allow more competition for other developing countries exports