The Politicized Tragedy
The MH17 incident holds heavy implications for the future of the Ukrainian crisis
Current Issue
· Table of Contents
· Editor's Desk
· Previous Issues
· Subscribe to Mag
Subscribe Now >>
Weekly Watch
Expert's View
Market Watch
North American Report
Government Documents
Expat's Eye
Photo Gallery
Reader's Service
Learning with
'Beijing Review'
E-mail us
RSS Feeds
PDF Edition
Reader's Letters
Make Beijing Review your homepage
Hot Links

Market Avenue

Top Story
Top Story
UPDATED: February 10, 2014 NO. 7 FEBRUARY 13, 2014
Making the Yuan More Flexible

The exchange rate of the Chinese yuan against the U.S. dollar reached new peaks 41 times throughout 2013, appreciating by nearly 3 percent in terms of central parity. During the past year, while currencies of all other BRICS economies depreciated against the dollar, China's yuan showed strong momentum and the trend is expected to continue in 2014.

The internationalization of the yuan requires its moderate appreciation to attract attention from the market. An excessively rapid rise of the yuan is not a good thing.

Normally a country's currency appreciates when its economy poses strong growth, resulting in the currency's rising role in the international monetary market. In 2013, the Chinese economy had been sluggish until stabilizing in the third quarter, and China's voting share in the International Monetary Fund didn't increase within the year, which couldn't explain the yuan's fast appreciation.

The appreciation of the yuan has significantly weakened China's role as "the world's factory." Many export-oriented enterprises experienced dramatic profit drops, with many even suspending their production. While export demand shows moderate recovery, the export registered negative contribution to China's economic growth in 2013.

China's export-oriented companies are mostly labor-intensive. If the yuan exchange rate continues its upward momentum in 2014, China's exports could suffer enormously, which could further affect the employment situation and even economic and social stability. As the yuan is not convertible under capital accounts, so the domestic market didn't show much response to the yuan appreciation.

China will comprehensively promote reforms this year, as decision makers focus on how to enhance national interests and protect people's interests during the exchange rate reform. The main priority is to increase the flexibility of the exchange rate through reforming the exchange rate formation mechanism.

Top Story
-Taking Part at Sea
-A 'Cool War'?
-Fuel for a Revolution
-Weeding Out
-Alibaba IPO Looms
Related Stories
-Stronger Yuan Arouses Concern
-The Renminbi as a Game Changer
Most Popular
About BEIJINGREVIEW | About beijingreview.com | Rss Feeds | Contact us | Advertising | Subscribe & Service | Make Beijing Review your homepage
Copyright Beijing Review All right reserved