The Historical Review of Chinese Yuan

The Peoples Bank of China is founded in 1st December 1948 and issued the uniform currency — Renminbi. Later in January 1949, RMB exchange rate was first time announced by the People’s Bank of China in Tianjin. Since more than 60 years, the features of exchange rate arrangement were distinct in different period of times.

In the first three years (1950-1952) after the foundation of People Republic of China, rampant inflation emerged, commodity prices rapidly boomed and everything was in disorder. The Shanghai wholesale price index ascended from 100 in June 1949 to 2242.93 in March 1950 (Dong, 2005). Due to the determination of exchange rate rely on the comparison of commodity price between China and western countries, the old Chinese yuan dramatically slumped and RMB/USD exchange rate changed from 80 in January 1949 to 42000 in March 1950. From March 1950 to the end of 1952, domestic prices declined. In the meantime, Korean War was taken place and America and its allied countries announced a series of blockades and embargo acts against China. Under such conditions, China had to push imports and thus reduce exchange rate to 26170 old yuan per a dollar. In this period of time, the key trade partner of China was America, and this trade were largely operating by private-owned import and export businesses.

Under planned economy during 1953-78, Chinese foreign exchange policy largely depended on the price parity of exports between home and overseas countries. It also took price parity and immigrant remittances into consideration. The foreign exchange policy was very strict in that period of time. All the foreign exchange receipts must be sold to the country while usage was also under ‘planned’. The balance of payment mostly relied on mandatory plan and administrative methods. In other words, expense was determined by income and imports were determined by exports. The value was fixed at an official rate of RMB 2.46/USD (IMF) until 1971, the collapse of the Bretton Woods regime. RMB was overvalued due to ‘closed-door’ policy. At that time, as its guiding principle, China tried to be independent and stood on its own without borrowing foreign loans, and moreover foreign investment was not allowed during that time. After 1973, floating rate regime was widely used among western countries. In order to prevent the impact from inflation and exchange rate changes of western countries, Chinese monetary authorities set yuan to peg to a trade-weighted basket of currencies in August 19, 1974. After, the value of yuan was gradually increased until 1.52 RMB/USD before Chinese economic reform. The RMB exchange rate policy in this period of time still aimed to stabilize its position under the fluctuation of U. S. dollar. However, the cost of stability brought out RMB overvalued. It is because the exchange rate of RMB was gradually separated from the reality of foreign trade.

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The Chinese exchange rate policy experienced a round-trip change after economic reform from 1979 to 1985. Dual exchange rate system emerged in 1981 to take over traditional single exchange rate system. This helped to take care both trade and non-trade areas, and to avoid large loss on exports. Under the pressure from large government subsidiaries and the pressure from IMF and foreign companies, in 1st January 1985, China removed internal trade settlement price of exchange rate and back to single exchange rate system, which point at 1 USD = 2.80 RMB at that time. On the other hand, these implied the market had played increasingly roles with policy makers. From the beginning of economic reform till April 1991, China has made various attempts on changing of exchange rate regime, such as dual exchange rate system and pegs basket of currencies. These all helped to lay the foundation of carrying out managed floating exchange rate regime of RMB in the future. Furthermore, market rate was gradually improved, and effects from the adjustment of market rate were also playing a larger role.

After the foundation of foreign exchange swap centres in 1988, the official exchange rate was coexisted with swap market exchange rate until 1994. After a sharp depreciation in early 1990s, unification of exchange rates finally brought out new exchange rate regime, which induced the official exchange rate devalued from 5.72 RMB/USD to 8.72 RMB/USD. The managed floating system (as officially defined the new regime) indicated the bounds for the daily fluctuation of yuan against the dollar were no more than 0.3 percent (Liu, 2004). January 1st 1994 was a meaningful milestone for RMB, single exchange rate replaced the dual exchange rate and set the single exchange rate the same as market rate. From then on, 1 USD equal to 8.70 RMB, which mean the age that RMB pegging on UDS began. This equation retained until 21st July 2005 when RMB was revalued to 8.11 RMB/USD. Meanwhile RMB was released to more flexible floating currency with higher elasticity, and began to peg on a basket of currencies rather than simply focus on USD. At 11st January 2007 RMB has become the first time overtaking HK dollar in the past 13 years, while it broke the 7.80 RMB/USD point. Later in the same year, the daily fluctuation bounds expanded up to 0.5%.

Figure: RMB/USD Exchange Rate, 1966-2009

Source: IMF: International Financial Statistics 2010.

These adjustments from 2005 represented that China aimed to peg on basket of currencies rather than USD and to build up a more flexible and managed exchange rate regime which base on the supply and demand of the market. From this short-term jump of the value of RMB, they helped to relax the global imbalance and to release the potential appreciate pressure. It was also positive to relief the conflict between RMB and USD. From long-term prospect, the establishment of new exchange rate regime will be beneficial to reform process and eventually achieve RMB exchange under capital account.

Nevertheless this situation did not last long. Chinese yuan pegged to US dollar again during the financial crisis happened in 2008. Since July 2005, the Chinese currency vis-à-vis the US dollar has appreciated by a total of 16.27% with the rate at 6.790 RMB/USD, at the time of this writing in early July 2010.

Dong, Dengxin (2005) ‘History of Renminbi’, China Value, available at: www.chinavalue.net/Article/Archive/2005/7/23/8694.html (accessed 20 March 2010).

Liu, H.C. (2004), “Follies of fiddling with the yuan”, Asian Times Online, available at: http://www.atimes.com/atimes/China/FJ23Ad06.html (accessed 5 June 2010).

Xu, Y. (2000) “China’s exchange rate policy” China Economic Review 11 (3), pp. 262-277

Purchasing Power Parity

Purchasing power parity (PPP) theory was popularized by Gustav Cassell in the 1920s, and it has been used as an accurate tool of measuring real exchange rate between countries. The theory that base on the law of one price states that the exchange rates between any two currencies will change to reflect the movement in the price levels of the two countries. In other words, the change of purchasing power between the two countries will be able to influence the exchange rate. For an easy example, we assume the price level of country X is Px, Py is for country Y, and E is the exchange rate of country X, according to PPP: E= Px / Py.

As one of the well-known exchange rate determinants, PPP theory is used by some critics and countries to put pressure on RMB through political and economic instruments. The most famous utilization of PPP theory, for example, is the Big Mac index (also known as Burgernomics, see Appendix A) which published by Economist. The index contains the prices of one McDonald’s Big Mac hamburger in each specific country, which are valued in USD. From this index, base on PPP theory, it is not difficult to figure out whether a currency is over or undervalued against USD and how much the differences are.

In July 2010, the latest version of Big Mac index (see Appendix B) indicates a Big Mac hamburger in China costs 1.95 USD, while it costs about 3.73 USD for the same burger in America. The implied PPP of dollar should be 3.54 (13.2 yuan / 3.73 dollar), but the actual exchange rate (on 21st July) was 6.78 yuan/dollar, which means Chinese yuan was about 48% (6.78-3.54 divided by 6.78) undervalued against U.S. dollar. This figure was 56% in the year 2004 while a Big Mac burger in China was selling at equivalent 1.26 U.S. dollar at that time.

Moreover there are other two indices has been brought out to against burgernomics. They are Starbucks index and iPod nano index. The Starbucks index takes the grand latte in Starbucks coffee shop as example and compares the prices in USD in every countries base on PPP theory. Figure 1 shows a cup of grand latte in China cost equally 4.10 dollars while the price in America is 3.75 dollars. It implies the PPP exchange rate should be 7.47 yuan/dollar, but the actual exchange rate is 6.83 yuan/dollar at that time. In other words, from this Grand Latte index, RMB is 9.4% overvalued against USD. The results are opposite when compare with the Big Mac index, which indicates a 49% undervalue of yuan (also see Appendix C).

IPod nano index is another comparison base on PPP theory (see Appendix D). The figures were provided by CommSec and Apple in October 2009. The selling price in the US is 149 dollars while it cost 25 dollar higher at 175.22 dollar in China. In this background, Chinese yuan is overvalued by 17.6% when compare with dollar and the exchange rate of PPP is 8.02 yuan/dollar. Figure 2 summarise the three indices in the light of PPP theory that contains the PPP exchange rates and valuation differences of each example. The comparison clearly states the large differences between the results. It is hard to make decision base on such result. All these bring us to a further step of thinking the flaws of PPP theory.

Rogoff (1996) states his sentiment that most of literate economists treat purchasing power parity as an anchor for long-term real exchange rates, though few others take PPP seriously as a short-run proposition. Taylor and Taylor (2004, p. 136) gives an extensive commentary on the words of Rogoff (1996) in which they emphasis the ways that exchange rate adjust. In details, countries with fixed exchange rate would likely to find out the equilibrium point, while countries with floating exchange rate have to estimate the level and variation under real and nominal exchange rates. They also indicate the international macroeconomic system is self-equilibrating, and this will be analysed in the next section.

Taylor and Taylor (2004) also come up with the question why the prices of burger and coffee differ internationally. It is because the some inputs of the goods cannot be traded internationally. For instance, wages of employees, rental fees and serving charge, these costs are hard to unify between countries. In other words, it is impossible to arbitrage internationally for these costs. This is the main reason why the idea that thinks purchasing power parity may hold, and this also refer to the Law of One Price as mentioned before. If the prices of one specific goods are different in each country, then people can simply shipping that goods from cheaper region to the region with high price and thus gain riskless profit. And arbitraging will have impact on countries aggregate price level as well. Therefore the PPP exchange rate is considered to be hold between countries in the light of Law of One Price.

Moreover as the flaws, PPP firstly is based on traded goods but ignore non-trade goods. The suggestion from Taylor and Taylor (2004) states the producer price indices (PPIs) could be more helpful to be tested, rather than the consumer price indices (CPIs) which contain more non-tradable goods. Second, trade costs, trade barriers, taxes and tariff will all be able to shock the Law of One Price. These issues also cannot be neglected. Third, it is not easy to choose which price indices should be used, CPI or GDP deflator, etc. For instance, there are eight main categories in CPI figures and contain more than 200 commodity and services. Moreover the weights of each category are different between countries, and the difference between China and America is very large. In American CPI, housing weighs 40%, while China does not take this issue into account. High housing price, however as we all know, it is one of the crucial topic for both citizens and government in China and more and more Chinese people cannot afford the whopping price. Also, the weight changing cycle is too long (about 10 years in the USA) to catch up with the development of people’s lives. Therefore PPP should be treated with caution.

There is one other problem that is easy to be ignored by many critics when applying PPP theory on specific goods, such as Big Mac or Starbucks coffee. PPP is supposed to be for commodities that appear in the basket of goods for an average person. However, in reality, there is a huge gap between the wealthy and poor in China and this also cause by the large population. No doubt 28 yuan for a cup of drink in China is very luxury. Even some big provinces do not have any Starbucks coffee shop in any of their cities till now. A country with 1.3 billion people, where 0.8 billion included are farmers. Some poor farm family could only earn thousands of yuan per a whole year. It is very difficult for them to image to buy a Big Mac or a latte and to know what iPod it is. A cup of grand latte (4.0 USD) is almost twenty times expensive than a bottle of pure water (0.2 USD) in China. PPP standard here will be no longer comparable. Furthermore, even suppose these goods are very common and most of Chinese are afford and like to buy them, there are still existing issues have to take into consideration, as mentioned above, such as non-tradable costs or even consuming habit.

Taylor, Alan M. and Mark P. Taylor (2004) ‘The Purchasing power parity debate’, Journal of Economic Perspectives, 18 (4): 135-158

Rogoff, K. (1996) ‘The purchasing power puzzle’, Journal of Economic Literature, 33.

Sarno, L. and Taylor, M.P. (2002) ‘Purchasing Power Parity and the Real Exchange Rate’, International Monetary Fund Staff Papers, vol. 49, pp. 65-105

Gibson, H.D. (1996) ‘International Finance: Exchange Rates and Financial Flows in the International System’, Longman Publishing, New York, pp. 50-139

Macroeconomic and Balance of Payment

In the past few years, China is the origin of up to 17% of the aggregate imports of the USA. This became the reason that the senators get together to give pressure on US government, which with the huge trade deficit on its current account, and ask to put China into the currency manipulator list. This problem can try be solved into two ways. First is from American side, in order to prevent large imports from China, America can impose higher taxation of international trade goods, set up more trade barriers or simply restrict the quantity of Chinese imports. In reality these methods cannot truly solve the problem of US high trade deficit with China. Apprehension and feasibility are also the issues that America worried, such as full trade war with China.

In May 2010, trade deficit of America increased to 42.3 billion dollars, which 22.3 billion dollars of it come from China. Critics, like Paul Krugman, urge Obama’s government to take strong measures on China, such as impose 25% import surtaxes on Chinese products (Xin, Fu, and Chen, 2010). For a well-known example, in 80s century, American used to force Japanese yen steadily appreciate due to the great deficit between Japan and western countries. It caused Japanese economy get into trouble for a long time, whereas there was no change to the deficit after yen appreciation and the deficit even got worse in some years. This time, America changes only the form but not the content. Even though China has largely revalued its currency, Thailand, India, Vietnam, etc, one of these countries will replace China’s position afterwards and become the biggest export country to America, and the total deficit will not change.

From China’s view, it can release the pressure by revaluing its currency. Then RMB become more expensive and thus Chinese product tend to be more expensive as well. Less competitive power of Chinese products will cause fewer exports from China. However many believe this will bring number of problems to the global economy even America itself, so America did not immediately list China as a ‘currency manipulator’. On the other hand, China’s expansionary fiscal policy of stimulating domestic aggregate demand by gaining spending also release some pressure of the American’s concern (Soofi, 2009). The more demand in China implies more imports from America, and therefore mitigate the huge US trade deficit with China.

In terms of macroeconomic theory, we can develop an IS/LM/BP/PC framework. The x, y axes on IS/LM/BP_Curve diagram represent national income and rate of interest respectively (See Diagram 1). China, as ‘world factory’, has huge foreign funds and investment. Thus capital mobility is also high, which identifies BP curve as balance of payment is seen as relatively flat to LM curve. IS curve has a negative slope. YFE represent full employment. The right hand side is Philippe Curve (PC), and x, y axes respectively represent the level of unemployment and inflation rate. PC curve do not move.

The expansionary fiscal policy aims to reduce the huge trade deficit between China and America and consequently mitigate the pressure of appreciation of RMB. First increased government spending would cause growth of national income. It helps Chinese people to get jobs and hence they will become better off. They will spend more once they are wealthier than before, and especially they will spend more on imports, such as US products. China’s demand for foreign products increase, so IS0 shift upwards to the right and stop at IS1. IS1 cross LM at point (Y1, r1) that lies above BP0. On y axe, r0 move to r1, interest rate increases. China’s financial products will be more attractive to US investors, and therefore indicates the level of total exports will be higher than the total imports.

LM

PC

Ï€ 0

Ï€ 2

Ï€

U0

U2

U

Y1

Y2

Y0

Y

YFE

IS1

IS2

IS0

BP0

BP1

r2

r1

r0

r

Diagram 1

Balance of payment surplus cause yuan increase in value, and thus the exchange rate appreciate. It will result changes on both BP0 and IS1. First, the increasing value of yuan will boost imports while foreign products become relatively cheaper. Interest rates have to increase in order to achieve the balance of payment after the change of imports. But national income remains stable, so BP0 should shift upwards to the left and hence adapt the new rate of interest. On the other hand, due to the increasing value of yuan, the demand for Chinese products will be decreased as foreign consumer may prefer their own goods. IS1 shift backwards to the left until meet BP1 on LM. The new equilibrium point appears at (Y2, r2) where balance of payment surplus eliminates.

From Y0 to Y2, national income moved close to the full employment and the full employment gap becomes smaller, which implies that more people in China will get jobs. The correlative explanation on PC curve indicates inflation rate will finally go up and unemployment reduces. For shortages this model only focus on two countries, China and America in above case, and hence do not guarantee whether the aggregate trade balance would be worse or not with respect to all other trading partners of America. The reaction of managing the import demand will not be the same of each country.

Soofi and Moussavi (2004) find out the numeral correlative reaction of a country’s export response by the changing of a country’s demand in agriculture, mining, manufacturing and Trade&Trans areas (see Appendix E). Base on their finding, the American Agriculture, Mining, and Manufacturing sectors are able to gain largely from economic expansion in China, and moreover the US agriculture exports would have largest benefit from Chinese economic expansion.

Pilbeam, Keith (2006) ‘International Finance’, 3rd edition, Part Two: ‘Exchange rate determination: theory, evidence and policy’, Basingstoke: Palgrave Macmillan, pp. 123-258

Thirlwall, A. P., and H. D. Gibson (1992) ‘Balance-of-Payments Theory and the United Kingdom Experience’, 4th edition, Macmillan Academic and Professional Ltd, London, pp.59-127

Soofi, A.S. (2009) ‘China’s exchange rate policy and the United States’ trade deficits’ Journal of Economic Studies 36 (1), pp. 36-65

Soofi, A. and S. Moussavi (2004), ‘Transmissions of real economic shocks across the Pacific Rim economies’, Journal of Policy Modelling, Vol. 26 Nos 8-9, pp. 959-72.

Xin, Z. M., J. Fu and J. L. Chen (2010) ‘Yuan ‘not cause of US woes’: scholar’, China Daily, available at: www.chinadaily.com.cn/china/2010-03/17/content_9599767.htm (accessed 20 March 2010).

Current Account

The major function for current account is to record all transactions entailing goods and services. There are many factors could make changes on current account, such as domestic inflation, domestic income and government restrictions. Exchange rate is one of the most influential factors. Tucker, Madura and Chiang (1991) indicate the inverse relation between a nation’s current account balance and the value of its currency. They set US dollar as example to illustrate the opposite direction of the relation. But this relationship is not suitable for China’s situation where exchange rate was fixed against dollar before and now is managed floating.

Diagram 2

Quote from 2010 China Country Report, IMF

The above figures illustrate that the China’s current account surplus shrank a lot from 2008 till middle of 2010, but, under global recession, its market share of world exports accelerate even faster and almost reach 10% in 2010. Moreover, the structure reforms, increasing wages and recent appreciation will all help to boost the national income and hence shrink the surplus. According to China Country Report (2010), it estimates the surplus will continue go down, and in order to maintain or reduce the surplus government policies will play a crucial role in the coming future.

China Country Report (2010) also indicates three main implications to the exchange rate issues base on the status and forecast of current account. It also states the suggestions from national authorities against IMF’s assessment. First, Chinese authorities refute that fast increasing international reserves is a compelling evidence to explain RMB is undervalued, especially under a greatest expansion of global liquidity in the history. Second, IMF point out the current exchange rate level is quite similar as the level in 1999-2003. At the mean time, China’s productivity is much higher than most of other countries. Authorities believe comparison to the past data is deceptive, because it is not sure that if the previous point is on equilibrium or not.

Third, the assessment from IMF claims there will be a further huge surplus for China in the coming future, but Chinese authorities refuted this view. Authorities believe the structure of saving and investment behaviour in China has already changed in the past few years, which including the appreciation of real exchange rate, pension system and etc. They also believe the value of RMB is very closer to the equilibrium point than before, and the share of imports and domestic demand will steadily increase. Authorities were confident that current account surplus would decline and would reduce to around 4% of GDP by the end of 2010. If it is true after few months, the undervalued yuan might not be a topic in the future.

China Country Report 2010 (2010), ‘People’s Republic of China: 2010 Article IV Consultation-Staff Report’, International Monetary Fund, Washington, D.C.

Tucker, A.L., J. Madura and T.C. Chiang (1991) ‘International Financial Markets, Part One: Foreign Exchange and Commodity markets’, West Publishing Company, USA, pp. 17-68

Exchange Rate Misconception and Real Impact

The pressure of Chinese yuan has been existed for many years, but, recently in 2010, the voice of appreciation on yuan is much louder than before. China has its own way to manage the rate and policy, where pressures come from outside. Correct comments may be helpful to the development of a country or to get rid of the recession, but negative misconceptions in economic theory will lead to harm to the stabilization of currency. McKinnon and Schnabl (2009) indicate three misconceptions about Chinese yuan and its exchange rate.

The first misconception is that exchange rate can affect the trade balance. They point out two reasons. It is important to make sure surplus saving from foreign investment on current account is counted in foreign currency, such as US dollar, but not local currency, like yuan. Therefore it is obvious that the value of surplus, as foreign currency, will not change. If the value of surplus does not change, there should be no impact on the trade balance. Another reason is that China owns more than 860 billion dollars bonds of America. This huge amount of money will be relatively depreciated if the yuan gain in value, and therefore dollar’s value fall will eventually reduce domestic expenditure. Imports will go down afterwards. On the other hand, as mentioned before, appreciation on yuan will further induce decline on exports. Qiao (2007), cited in McKinnon and Schnabl (2009, p. 26) conclude that the reduction in imports offsets the changes in exports, and hence it is ambiguous to define the change in trade balance, or it may be small.

The second misconception claims that increasing value of exchange rate will be able to reduce inflation. McKinnon and Schnabl (2009, p. 27) believe it in long-term, but, in short-run, inflation could be occurred by well-telegraphed transition. Also, loss of monetary control could influence inflation to override deflation impact. Therefore the issues of inflation should be discussed in both long and short term, rather than only focus on long-term effects, which will leave false impression. As an effective tool to reduce inflation, they also indicate if the coming inflation is too much, People’s Bank of China (PBOC) would have little choice to keep appreciate RMB.

The third misconception is that the floating exchange rate would help to equilibrate the foreign exchange market. It is impossible for market exchange rate, which locates at the balance point of demand and supple, exist if assuming that PBOC withdraw from the foreign exchange market and let the private market makers, such as Chinese banks, insurance companies or pension funds, to determine the exchange rate. Moreover, Chinese financial institutions would not let the amount of US dollar saving boom continually to prevent the exchange rate risk. Then they will become the buyers of dollar assets in case of the future depreciation.

Those countries, which have ulterior motives, would like to give pressure to appreciate yuan. However, some theoretical support of those voices comes from the above ostensible ‘conceptions’. Obviously, it is not difficult to find out their purposes from the negative impacts of an increasing value on RMB. This will be discussed in the coming part. After the yuan stopped dollar-pegged in mid 2005, the yuan has jumped by 2% in value, which from 8.11 yuan/dollar to the current rate of 6.80 yuan/dollar. In this period of time, there are more voices that required Chinese government to revalue its currency. Chinese government refuted them in different reasons, but this ‘game’ never stopped. Below points will discuss three main negative aspects base on China’s position.

Bonds risk. The current amount of US treasury bonds that China holds, as mentioned, is more than 860 billion dollars. And China is now the largest creditor of American. Higher US bonds could bring more power to China when dealing with foreign affairs, but the recent consideration is the increasing value of yuan. The US bonds will be relatively devalued when yuan appreciate. China has the world’s largest foreign reserve, so the increasing value of yuan would have significant impact on these.

Firms, workers and businesses. China is known as ‘world’s factory’ due to low labour cost and attracts huge number of investment from many developed countries, especially the USA. Most of these investments concentrate in labour-intensive industry, such as clothes, agriculture or glasses, but, on the other hand, these industries can only gain low profit from trading. RMB pressure test has done by some Chinese organizations and they estimate that 1% increase in value of yuan will result relatively 1% drop in profit. However most of these industries are only holding around 5% profit for their businesses (China Economic Information Daily, 2010).

If the value of yuan boom in short time, the loss would be much higher than the figure above, and will consequently lead to bankruptcy to the firms. It will be a disaster for most of labours will lose their jobs, and unemployment rate ascend. What worse, base on the Chinese age structure, Beck (2010) point out that China is reaching the peak labour time in these two years. These will all have negative effect on the sustainable development of China.

Bubble and crisis. High inflation, especially housing price, is one of the key concerns for both Chinese government and Chinese residents. More people cannot afford to buy their living place. Trend implies a higher price in the future. According to previous analysis, appreciation could help to solve the inflation problem in long-run, but, in reality, increasing value of yuan would instantly attract huge funds from speculators and hence pushing the prices to a higher level. Therefore it is important to shrink the bubble before rise the value of yuan, and thus to prevent financial crisis in China.

McKinnon, R. and G. Schnabl (2009) ‘The Case for Stabilizing China’s Exchange

Rate: Setting the Stage for Fiscal Expansion’, Institute of World Economics and Politics, Vol. 17, pp. 1-32

Qiao, Hong (2007), ‘Exchange rates and trade balances under the dollar standard’, Journal of Policy Modelling, Vol. 29, No. 5, pp. 765-82

China Economic Information Daily (2010) ‘RMB stress test results over the industries’ Xinhua News, available at: jjckb.xinhuanet.com/gnyw/2010-04/02/content_215063.htm (accessed 10 April 2010).

Beck, B. (2010) ‘Peak Labour’ The World in 2010, The Economist, p. 80

Appendix A

The Big Mac index

Exchanging blows

Our Big Mac index shows the Chinese yuan is still undervalued

Mar 17th 2010 | From The Economist online

Source from: http://www.economist.com/node/15715184 Assessed 9 June 2010.

Appendix B

Dec, 16th, 2004 July, 22nd, 2010

Source from: http://www.economist.com/node/3503641 Assessed 22 June 2010.

Appendix B (cont)

Source from: http://www.economist.com/node/16646178 Assessed 27 July 2010.

Appendix C

Starbucks and the overvalued yuan

Sep 25, 2009 08:36 EDT

Source from: blogs.reuters.com/china/2009/09/25/starbucks-and-the-overvalued-yuan

Assessed 9 May 2010.

Appendix D

CommSec iPod index: Australia slips eight places

By Craig James

Source from: images.comsec.com.au/newsresearch/articles/global%20comparisons.pdf

Assessed 4 May 2010.

Appendix E

Export responses of China, Japan, and the United States to 1 percent rise in the final demand sp