The Effect of RMB Revaluation in the Economy of China Dissertation

The Effect of RMB Revaluation in the Economy of China - Dissertation Example The Effect of RMB Revaluation in the Economy of China Table of Contents List of Tables 4 List of Figures 4 Chapter 1: Introduction 5 1.1Background of the research problem 5 1.2Statement of the research problem 5 1.3Research objectives 5 1.4Research questions 6 1.5Significance of the research problem 6 1.6Definition of terms 7 Chapter 2: Review of Related Literature 9 2.1 Chapter Overview 9 2.2 Currency revaluation and its effects 10 2.3 The fixed vs. ... The director also drew a plan of action if China did not withdraw the control of currency and permit the renminbi (RMB) to gain strength. The central bank of China known as the People’s Bank of China allowed for some relaxation. The bank announced that will abandon the two year old peg. The peg has kept the RMB with the dollar (Yu, 2010, p. 2). It allowed RMB to respond according to the forces of the market. China will now begin to move into the regime of floating exchange rate. The regime will be a tight one which was in practice in the period between 2005 and 2008. The value of RMB will be the base on a basket of currencies within a narrow range (Wharton University of Pennsylvania, 2010). China believed that the stable RMB policy is good for the country from the time of the financial crisis of Asia. The country turned away from the exporters who were reported for violating the standards of pollution. The strengthening of the RMB against the U.S. dollar has continued unabated since 2005. It will follow the stable rising path since the country is under intense inflationary pressure (Wang and Whalley, 2007, p. 3). 1.2 Statement of the research problem The problem this dissertation seeks to resolve is: What effects shall the revaluation of the renminbi have in China’s economy, as well as in the world economy? The principal goal of the dissertation is to identify the impacts of the revaluation of the RMB on the economy of China. 1.3 Research objectives In adopting the research problem specified above, the research undertakes to achieve the following objectives: (1) To examine the necessity of a currency revaluation in