Revaluation of the Chinese Currency and Its Impacts on China: A Political Economy Approach

Abstract

This paper reviews and assesses the policy debates on the Renminbi (RMB) revaluation issue and the reform of China`s foreign exchange rate regime that have taken place both inside and outside China. It focuses on two key issues: the extent of revaluation and its impact on China. The policy debates and the consequent decisions on revaluation indicate that despite continued international pressure, it is unlikely that the Chinese leadership will make any radical changes to the RMB in the near future It is reasonable to expect that the Chinese government will continue its gradualist approach, with the long-term objective of achieving a flexible regime.