China's Exchange Rate Policy and Overseas Investment in the United States: Past, Present, and Future Recommendation

Ali M. Kutan ； Peng-Hung Tsai

《企業管理學報》 72期 (2007/03) Pp. 1-16

並列摘要

This paper studies two issues critical for China's economy. First, the impact of China's exchange rate policy on exports revenues. We find that a further appreciation of the Yuan would bring a significant decline in China's exports. We therefore recommend a credible, gradual appreciation of the Yuan as far as for future exchange rate policy. Second, we investigate China's portfolio investment in the US. We find that China's investment in has grown significantly. However, China invests only in US government and corporate bonds. The former is understandable because China uses US government bonds to manipulate the value of the Yuan against the US dollar. However, investing only in bonds may not be a good practice. We recommend that China should also invest in US equity to have a more balanced portfolio investment.

並列關鍵字

China Economy ； Exchange Rate Policy ； Appreciation ； U.S. Government Bonds

參考文獻

Frankel, Jeffrey A.(2007).Assessing China`s Exchange Rate Regime.Mimeo:Harvard University.

Giles, Judith A.,Cara L. Williams(2000).Export-led Growth: A Survey of the Empirical Literature and Some Non-causality Results. Part 1.Journal of International Trade & Economic Development.9(3),261-337.

Goldstein, Morris,Nicholas Lardy(2006).China`s Exchange Rate Policy Dilemma, 2006.(American Economic Review, Papers and Proceedings).

Kenen, Peter B.,Dani Rodrik(1986).Measuring and Analyzing the Effects of Short-term Volatility in Real Exchanges Rates.(Review of Economics and Statistics).

MacDonald, Ronald(1998).What Do We Really Know About Real Exchange Rates?.Working Paper Series of the Oesterreichische Nationalbank.20