Problem of Yuan Undervaluation in US-China Trade Relations

DOI: 10.20542/0131-2227-2012-3-20-28

A. Polivach, Financial University under the Government of the Russian Federation, 49, Leningradskii prosp., Moscow, 125993, Russian Federation (

Abstract. Before the world economic crisis the Chinese government restricted the sphere of the Yuan’s circulation exceptionally by the domestic market. Basically, until that time the Yuan was not freely convertible while the Chinese foreign trade transactions were operated with the help of the US dollar. This is a sufficient reason to state that the issue of Yuan’s underestimated exchange rate has no fundamental relevance. However, the crisis forced China to substantially extend the utilization of its national currency in the international settlements. This is especially true in case of mutual settlements with the neighbor countries. So far, presumably, the issue of Yuan’s underestimated exchange rate will, at last, receive a scientific validity only when the Chinese national currency will become fully convertible and the scales of its utilization will become comparable with those of the traditional hard currencies.

Keywords: Yuan, low exchange rate, composition of US-Chinese trade, US deficit, exchange rate manipulations, unfair benefit in trade, industrial assembly services

Registered in System SCIENCE INDEX

For citation:
Polivach A. Problem of Yuan Undervaluation in US-China Trade Relations. World Eonomy and International Relations, 2012, no. 3, pp. 20-28.

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