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Eva Roca

on 29 April 2010

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Transcript of China

4.Should China appreciate it's currency? 1.China has been the first to recover from the crisis, but is China's economy really healthy? 3.Does China really depend on America? 2.How was it posible that America had so much money to finance so many credits? Desire of China's authorities to mantain their currency weak Why? EXPORTATION forces China to maintain a low interest rate abundant loan big quantities of property investment BUBBLE 1.300 million chinese 19% world population is chinese Is China's economy really healthy? How was it possible that America had so much money to finance so many credits? deficit current account USA = 1.5% global GDP Only possible if China and other countries with surplus contribute to finance this deficit China interested because it is where it sells big amount of exportation Should China appreciate it's currency? Advantatges of a stronger yuan Drawbacks of a stronger yuan avoid a trade war between America and China
rebalancing it's economy towards domestic consumption
easier to control inflation, freer hand to raise interest rates
cut import prices
positive for trading partners
increase chinese purchasing power
a lot of jobs come from exportation
surplus would decrease
PRESENTATION STRUCTURE they take part in the currency market buying big quantities of assets in dolars before: bonds and shares of american companies
now: public debt YUAN 2005 2008 yuan pegged to dolar yuan fixed using multiple
currencies as reference points yuan pegged again to dolar
1$ = 6.83 yuan 1 yuan = 9,21€ 1. Introduction
11. Questions
111. Conclusions Does China really depend on the USA? from USA exportation 0.4% - 0.5% Employment created by exportation 6% - 8% from which to the USA 1.2% - 1.5% but... How do they achieve it? China: the waking up of a giant Conclusions - Although apparently China's economy seems to be healthy
a bubble is likely to explote
- China has been absorbing american's deficit
- The USA depends every time more on China
- China should appreciate the yuan, this would benefit everyone THANK YOU FOR YOUR ATTENTION USA depends on China? Enough measures from the government to prevent it?
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