Itb - China; Yuan Devaluation Effects
After more than a decade, the value of the Yuan has risen relative to the dollar.
While the revaluation amounts to just a two percent difference at the moment, there is speculation that the Chinese will continue to allow the Yuan to rise.
What effect will this initial movement have on Chinese workers and consumers?
The affect of Yuan appreciation of over the US Dollar can be divided into 2 categories as below: 1. Affects on China Exporter and employment 2. Affects on China consumers.
Affects on China Exporter and employment
If we look from the perspective of Chinese workers and consumers, Yuan aggressive appreciation may lead into destabilizing spike in Chinese unemployment and spark a trade war that drags the global economy back into a deep recession.
Since world economy has been hampered with a 2008 recessions, Chinese have backed the world economic growth by maintaining their exports to the developed country which majority of them have recorded negative economic growth.
Short terms affect when Yuan have appreciated so much compared to US Dollar, Chinese manufacturers are not enjoying the competitive price of their homeland resource. Be it labor cost, infrastructure rental and transportation cost, Chinese manufacturer have enjoyed among the lowest cost combined before this. This advantage has been taken away once the Yuan have ascended compared to Dollar.
Chinese manufacturers are famously known to produce abundance of products with the cheapest price. All these can only be achieved with a lower rate of Yuan since this is the key determinants of all aspects in producing/manufacturing at the lowest cost as possible.
If Yuan is allowed to arise, these manufacturer will lost their potential customer abroad since the cheap price they used to enjoy before are no longer offered by the Chinese manufacturer.
But surprisingly, Chinese manufacturer and exporter have come out with their own coping measure to counter the disadvantages of Yuan
While the revaluation amounts to just a two percent difference at the moment, there is speculation that the Chinese will continue to allow the Yuan to rise.
What effect will this initial movement have on Chinese workers and consumers?
The affect of Yuan appreciation of over the US Dollar can be divided into 2 categories as below: 1. Affects on China Exporter and employment 2. Affects on China consumers.
Affects on China Exporter and employment
If we look from the perspective of Chinese workers and consumers, Yuan aggressive appreciation may lead into destabilizing spike in Chinese unemployment and spark a trade war that drags the global economy back into a deep recession.
Since world economy has been hampered with a 2008 recessions, Chinese have backed the world economic growth by maintaining their exports to the developed country which majority of them have recorded negative economic growth.
Short terms affect when Yuan have appreciated so much compared to US Dollar, Chinese manufacturers are not enjoying the competitive price of their homeland resource. Be it labor cost, infrastructure rental and transportation cost, Chinese manufacturer have enjoyed among the lowest cost combined before this. This advantage has been taken away once the Yuan have ascended compared to Dollar.
Chinese manufacturers are famously known to produce abundance of products with the cheapest price. All these can only be achieved with a lower rate of Yuan since this is the key determinants of all aspects in producing/manufacturing at the lowest cost as possible.
If Yuan is allowed to arise, these manufacturer will lost their potential customer abroad since the cheap price they used to enjoy before are no longer offered by the Chinese manufacturer.
But surprisingly, Chinese manufacturer and exporter have come out with their own coping measure to counter the disadvantages of Yuan