An Evaluation of the Impact of Rmb Appreciation on the Chinese Agricultural Trade
Centre for English Language Education
Independent Research Project for Pre Masters
Academic year 2011-2012, Semester Two
Title: An evaluation of the impact of RMB appreciation on the Chinese agricultural trade
Abstract As a major part of the Chinese economy, China’s agricultural trade has developed since the 1980s. After the Chinese currency start being appreciated by the domestic government in 2005, this tendency seemed to soar. Researches have shown both internal and external factors can account for the RMB appreciation and both negative and positive effects have been presented on China’s agricultural exports and imports. Therefore, this project firstly discusses the different causes of RMB appreciation, followed by an evaluation of its impact on China’s agricultural trade which finally concludes the overall effects are beneficial.
Content
Page
Abstract
Introduction 1
Literature Review 2
1. The Causes of RMB appreciation 4 1.1 Intrinsic factors 4 1.2 Extrinsic factors 5
2. The Impact on China’s agricultural trade 6 2.1 Adverse effects on exports 6 2.2 Beneficial effects on imports 7 2.3 Evaluation of the effects 7
Conclusion 9
Bibliography 10
Introduction
In recent years, the appreciation of Renminbi (Chinese currency) has become a much-discussed topic in the world .The revolution of the Yuan can be traced back to July 21 in 2005, when Chinese government announced its domestic currency appreciated 2.1% against the U.S dollar (Goldstein and Lardy, 2006, p.1). Since then, the Chinese RMB has been in frequent fluctuation and appreciating gradually. This process can be treated as “a growth of the international purchasing power of domestic currency” (Zhang and Li, 2010, p.2) and be defined as “an increase in the value of a currency as measured by the amount of
Independent Research Project for Pre Masters
Academic year 2011-2012, Semester Two
Title: An evaluation of the impact of RMB appreciation on the Chinese agricultural trade
Abstract As a major part of the Chinese economy, China’s agricultural trade has developed since the 1980s. After the Chinese currency start being appreciated by the domestic government in 2005, this tendency seemed to soar. Researches have shown both internal and external factors can account for the RMB appreciation and both negative and positive effects have been presented on China’s agricultural exports and imports. Therefore, this project firstly discusses the different causes of RMB appreciation, followed by an evaluation of its impact on China’s agricultural trade which finally concludes the overall effects are beneficial.
Content
Page
Abstract
Introduction 1
Literature Review 2
1. The Causes of RMB appreciation 4 1.1 Intrinsic factors 4 1.2 Extrinsic factors 5
2. The Impact on China’s agricultural trade 6 2.1 Adverse effects on exports 6 2.2 Beneficial effects on imports 7 2.3 Evaluation of the effects 7
Conclusion 9
Bibliography 10
Introduction
In recent years, the appreciation of Renminbi (Chinese currency) has become a much-discussed topic in the world .The revolution of the Yuan can be traced back to July 21 in 2005, when Chinese government announced its domestic currency appreciated 2.1% against the U.S dollar (Goldstein and Lardy, 2006, p.1). Since then, the Chinese RMB has been in frequent fluctuation and appreciating gradually. This process can be treated as “a growth of the international purchasing power of domestic currency” (Zhang and Li, 2010, p.2) and be defined as “an increase in the value of a currency as measured by the amount of
Bibliography: Bonarriva, J. 2011. China’s Agricultural Trade: Competitive Conditions and Effects on U.S. Exports. Washington D.C: USITC. Chen, L. 2009. Effect of RMB exchange rate movements on China 's agricultural export: A case study of export to Japan. China Agricultural Economic Review, 3, p.15. Cheung, Y. W, Chinn, M. D. & Fujii, E. 2006. The Chinese economies in global context: The integration process and its determinants. Journal of the Japanese and International Economies, 20, p.128-153. Das, D. K. 2009. The evolution of renminbi yuan and the protracted debate on its undervaluation: An integrated review. Journal of Asian Economics, 20, p.570-579. Gale, F. & Tuan, F. 2007. China Currency Appreciation Could Boost U.S. Agricultural Exports. Washington D.C. Goldstein, M. & Lardy, N. 2006. China 's Exchange Rate Policy Dilemma. American Economic Review, 96, p.422-426. Ju, R. & Yang, R. 2010. Risk of Exchange Rate Pass-through and Adaptive Strategies of Land-intensive Products in China: Taking Import Products from U.S. as an Example. Agriculture and Agricultural Science Procedia, 1, p.170-178. Mankiw, N. G., Quah, E. & Wilson, P. 2011. Principles of Economics. An Asian Edition. Singapo: Cengage Learning. Nair, M. K. V. & Sinnakkannu, J. 2010. De-pegging of the Chinese renminbi against the US dollar: analysis of its effects on China 's international trade competitiveness. Journal of the Asia Pacific Economy, 15, p.470-489. Nouira, R., Plane, P. & Sekkat, K. 2011. Exchange rate undervaluation and manufactured exports: A deliberate strategy? Journal of Comparative Economics, 39, p.584-601. Razmi, A., Rapetti, M. & Skott, P. 2012. The real exchange rate and economic development. Structural Change & Economic Dynamics, 23, p.151-169. Wang, H. H. & Ke, B. 2005. Efficiency tests of agricultural commodity futures markets in China. Australian Journal of Agricultural & Resource Economics, 49, p.125-141. Yi, G. 2008. RENMINBI EXCHANGE RATES AND RELEVANT INSTITUTIONAL FACTORS. CATO Journal, 28, p.187-196. Zhang, B. & Li, X. 2010. Currency appreciation and stock market performance: Evidence from China. Frontiers of Economics in China, 5, p.393-411. Zhang, J. & Fung, H.G. 2006. Winners and losers: Assessing the impact of Chinese Yuan appreciation. Journal of Policy Modeling, 28, p.995-1009.