World's Fast-growing Large Economies: China and India
NTRODUCTION
China and India are now seen as the world's fast-growing large economies [News Week, August 22-29, 2005]. Both countries have radically different economic models but both have outperformed many countries and they have become the main engines that drive Asia's and world growth. In particular, their trade and investment growths have a tremendous effect on the world economy. The liberalizationlib·er·al·ize
v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es
v.tr.
To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . .
..... Click the link for more information. process started in China in late 1978 while India opened up its economy in 1991 and both countries reduced trade barriers. It is apparent that China and India to some extent compete with each other in terms of trade Terms of trade
The weighted average of a nation's export prices relative to its import prices. flows and attracting foreign direct investments (FDIs) to their countries, but they have their own comparative advantage in terms of skills and endowments [Batra and Khan (2005)].
Recently, under the pressure of other countries especially the U.S., China changed its exchange rate by 2.1 percent in July 2005 and has been resisting making big changes in its exchange rates system. This policy change not only indicates that China will no longer peg the dollar at the historically fixed rate with the U.S. dollar but would adjust gradually its currency to a basket of other currencies.
In this study, we analyze the potential impacts of Chinese currencyCurrency has been used in China since the New Stone Age, in which Chinese also invented paper money in the 9th century.
Today Renminbi (Chinese: 人民幣), literally People's currency, abbreviated to RMB, is the currency in mainland of the People's
..... Click the link for more information. appreciations on India's economy. Our analysis is important because the total trade balance between
China and India are now seen as the world's fast-growing large economies [News Week, August 22-29, 2005]. Both countries have radically different economic models but both have outperformed many countries and they have become the main engines that drive Asia's and world growth. In particular, their trade and investment growths have a tremendous effect on the world economy. The liberalizationlib·er·al·ize
v. lib·er·al·ized, lib·er·al·iz·ing, lib·er·al·iz·es
v.tr.
To make liberal or more liberal: "Our standards of private conduct have been greatly liberalized . . .
..... Click the link for more information. process started in China in late 1978 while India opened up its economy in 1991 and both countries reduced trade barriers. It is apparent that China and India to some extent compete with each other in terms of trade Terms of trade
The weighted average of a nation's export prices relative to its import prices. flows and attracting foreign direct investments (FDIs) to their countries, but they have their own comparative advantage in terms of skills and endowments [Batra and Khan (2005)].
Recently, under the pressure of other countries especially the U.S., China changed its exchange rate by 2.1 percent in July 2005 and has been resisting making big changes in its exchange rates system. This policy change not only indicates that China will no longer peg the dollar at the historically fixed rate with the U.S. dollar but would adjust gradually its currency to a basket of other currencies.
In this study, we analyze the potential impacts of Chinese currencyCurrency has been used in China since the New Stone Age, in which Chinese also invented paper money in the 9th century.
Today Renminbi (Chinese: 人民幣), literally People's currency, abbreviated to RMB, is the currency in mainland of the People's
..... Click the link for more information. appreciations on India's economy. Our analysis is important because the total trade balance between