History of China exchange rate and its impact on its stable economy
History of China exchange rate and its impact on its stable economy
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C.F.G · External communityPost link
External question — Economics Stack Exchange
Author: C.F.G
Original post: https://economics.stackexchange.com/questions/60340
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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The following graph shows USD/CNY exchange rate that is available in
world bank
. What I understand from the USD/CNY exchange rate chart is that the government has implemented different exchange rate policies in different periods.
I am interested to know what was the impact of two different exchange rate policies (before 1994 and 1994-2004) on GDP, inflation rate and possible protests. In short, I would like to know in detail and with reference to why the Chinese government decided to use a fixed exchange rate policy between 1994 and 2004?
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pinnyto · External communityPost link
External answer — Economics Stack Exchange
Author: pinnyto
Original post: https://economics.stackexchange.com/a/60349
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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This is what I found:
China scrapped its distortion‑prone dual exchange‑rate system in January 1994, devaluing the official rate to ≈¥8.7/US$, and holding it around there until 2004.
Beijing presented this “nominal anchor” as a tactic that would curb inflation, reassure foreign investors and lock in export competitiveness while capital controls kept out hot money.
The strategy worked: CPI inflation plunged from 24 % in 1994 to 17 % in 1995 and single digits by 1997 and real GDP growth averaged about 9–10 % a year during the "peg period"
IMF
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Quoted from Forex.com.bd-Editorial External question — Economics Stack Exchange Author: C.F.G Source score (net votes, not local likes): 1 Original post: https://economics.stackexchange.com/questions/60340 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. The following graph shows USD/CNY exchange rate that is available in world bank . What I understand from the USD/CNY exchange rate chart is that the government has implemented different exchange rate policies in different periods. I am interested to know what was the impact of two different exchange rate policies (before 1994 and 1994-2004) on GDP, inflation rate and possible protests. In short, I would like to know in detail and with reference to why the Chinese government decided to use a fixed exchange rate policy between 1994 and 2004?
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