http://welkerswikinomics.com/blog/2008/05/19/chinas-silver-bullet-a-strong-rmb-could-solve-her-biggest-economic-woes/ for students and teachers of AP and IB Economics Tue, 06 Jan 2009 22:59:11 +0000 http://wordpress.org/?v=2.7 hourly 1 http://welkerswikinomics.com/blog/2008/05/19/chinas-silver-bullet-a-strong-rmb-could-solve-her-biggest-economic-woes/comment-page-1/#comment-7174 Nicholas s. Tue, 16 Dec 2008 15:07:04 +0000 http://welkerswikinomics.com/blog/2008/05/19/chinas-silver-bullet-a-strong-rmb-could-solve-her-biggest-economic-woes/#comment-7174 A strong RMB is necessary to simultaneously increase consumption and reduce inflation. The strength of the RMB compared to the US will mean that more Chinese are buying both American imports and Domestically produced goods, as their RMB is worth more. The Chinese government is unwilling to allow its currency to float absolutely freely; this is most likely due to the benefits of a weak currency for Chinese exporters who gain a supposed ‘unfair’ advantage over American producers. The article states, “The Chinese currency was undervalued by 27%”, many politicians are calling for a across the board tariff on all Chinese imports to the United States, this is known as a retaliatory protectionist measure. A strong RMB is necessary to simultaneously increase consumption and reduce inflation. The strength of the RMB compared to the US will mean that more Chinese are buying both American imports and Domestically produced goods, as their RMB is worth more. The Chinese government is unwilling to allow its currency to float absolutely freely; this is most likely due to the benefits of a weak currency for Chinese exporters who gain a supposed ‘unfair’ advantage over American producers. The article states, “The Chinese currency was undervalued by 27%”, many politicians are calling for a across the board tariff on all Chinese imports to the United States, this is known as a retaliatory protectionist measure.

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