Econ FINAL Article


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ARTICLE ECON 102 FINAL EXAM BBC News Monday, July 19, 1999 China hints at devaluation The Chinese Government appears to be seriously weighing the possibility of devaluing its currency, the renminbi, for the first time. China has stuck by its policy of maintaining a fixed link to the dollar during the two years of the Asian crisis, fearful that any move to devalue would touch off a further collapse of Asian currencies. But with the Asian economies now in recovery, attention is focusing on the heavy price China has had to pay for maintaining its international credibility. Economic growth is slowing, exports are becoming uncompetitive, and soaring imports have put pressure on domestic manufacturers. Articles have begun to appear in the Chinese press calling for a discussion of the economic merits of changing the exchange rate. As the currency is still not traded freely, it would be up to the government to take that decision. Dai Xianglong, the central bank governor, said that the currency's value should be determined by supply and demand, or the balance of payments - implying that a deteriorating balance of payments could lead to devaluation in the future.
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