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Alleged Chinese Currency manipulation: the case of Yuan in relation to the USD from 2005 to 2020
Belon, Sander ; Semerák, Vilém (advisor) ; Macháček, Vít (referee)
Currency manipulation has been an increasingly infamous studied topic espe- cially since the US accusation of Chinese currency manipulation in the sum- mer of 2019. Such accusations raise the question as to what extend the Chi- nese RMB exchange rate might be considered misaligned. This paper seeks to identify grounds of the accusation of currency manipulation by applying the Behavioural Equilibrium Exchange Rate Model (BEER) to indicate possi- ble misalignment. Annual data from 1980 to 2019 is employed for which this paper will emphasize on the period of 2005 to 2019. The utilised Johansen co-integration test and the Vector Error Correction Model (VECM) suggest a consistent undervaluation of the RMB exchange rate from 1980 to 2019. Such undervaluation ranges from -4.623% to -2.016% with a mean undervaluation from 2005 to 2019 of -2.464%. JEL Classification F12, F21, F23, H25, H71, H87 Keywords Behavioural Equilibrium Exchange Rate, Currency Manipulation, Vector Error Correction Model, China, Renminbi Title Alleged Chinese currency manipulation: the case of the Yuan in relation to the USD from 2005 to 2020. Author's e-mail sander@belon.be Supervisor's e-mail vilem.semerak@fsv.cuni.cz rozmezí od -4,623% do -2,016% s průměrným podhodnocením od roku 2005 do roku 2019 ve výši -2,464%.
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China's Equilibrium Exchange Rate
Hanousek, Milan ; Semerák, Vilém (advisor) ; Kruchynenko, Ihor (referee)
The object of this thesis is to estimate the equilibrium exchange rate of the Chinese currency and to determine how much the actual exchange rate de- viates from the equilibrium value. Throughout the China's central planned period the currency was highly overvalued, but economic reforms have brought it closer to the equilibrium. At the present time, the common perception is that the currency is significantly undervalued. We employ the fundamental equilibrium exchange rate (FEER), which enables to measure overvaluation or undervaluation of the actual real effective exchange rate. The basic require- ments for the calculating the FEER are estimated trade equations, a potential output for China and its main foreign partners and sustainable capital flows. Trade equations are estimated by the Engle-Granger two step estimator and the Johansen methodology. The modified version of trade equations is esti- mated by ordinary least squares. The dataset used in this study is composed of annual observations over the period 1981 and 2010. 1
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China's Equilibrium Exchange Rate
Hanousek, Milan ; Semerák, Vilém (advisor) ; Kruchynenko, Ihor (referee)
The object of this thesis is to estimate the equilibrium exchange rate of the Chinese currency and to determine how much the actual exchange rate de- viates from the equilibrium value. Throughout the China's central planned period the currency was highly overvalued, but economic reforms have brought it closer to the equilibrium. At the present time, the common perception is that the currency is significantly undervalued. We employ the fundamental equilibrium exchange rate (FEER), which enables to measure overvaluation or undervaluation of the actual real effective exchange rate. The basic require- ments for the calculating the FEER are estimated trade equations, a potential output for China and its main foreign partners and sustainable capital flows. Trade equations are estimated by the Engle-Granger two step estimator and the Johansen methodology. The modified version of trade equations is esti- mated by ordinary least squares. The dataset used in this study is composed of annual observations over the period 1981 and 2010. 1
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Analysis of Particular Aspects and Risks of Financial and Monetary System of the People's Republic of China
Veitz, Lukáš ; Ševčíková, Michaela (advisor) ; Pekárek, Štěpán (referee)
This thesis analyzes the development of financial system of the People's Republic of China in the period from 1995 to 2015. The thesis is solved in the continuing process of Chinese economy liberalization. Main goal of the thesis is to analyze particular aspects of Chinese financial and monetary system and point out its potential risks as well. To achieve this goal the method of analysis has been chosen, especially system analysis and sector analysis. The thesis shows that one of main risks of the liberalization of Chinese financial sector is especially growing loans volume in its economy which is connected in growing rate of non-productive loans respectively. Next risk is the structure of investors in capital market. Based on findings it is able to say the highest risk of banking sector is connected with growing shadow banking as the alternative financing method. The thesis finds the completing of capital account liberalization and interest rate liberalization to be important too. Main benefit of the thesis except of Chinese financial sector analysis is comparison of different point of views about forecasting of future of the Chinese economy.
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Exchange rate policy of People's Bank of China under pressure of yuan internationalization
Randl, Tomáš ; Hnát, Pavel (advisor) ; Jedlinský, Jakub (referee)
Chinese economy has reached its export limits and is located in an era of transformation process into new economic model based on domestic consumption and sector of services. Under pressure from foreign entities which require internationalization of yuan as an implementation of free floating exhange rate regime, China must deal with number of problems arising from the process of economic transformation. This thesis examines possible solutions to current problems from the perspective of exchange rate policy of the People's Bank of China.
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Yuan as a world currency
Král, Martin ; Brůna, Karel (advisor) ; Pour, Jiří (referee)
The aim of this thesis is to answer the question of whether the Chinese currency fulfills prerequisites for becoming another reserve currency alongside the already used reserve currencies and whether the Chinese authorities are able to ensure necessary changes for a smooth transition to a new monetary regime. China has already made a series of steps in this direction. The previous question will be answered accordingly. The first section of this paper summarizes general knowledge about world currency, its functions, features, and its position in the world economy, with the advantages and disadvantages accruing to the world currency issued by the state. There are presented factors that are prerequisites for internationalization of the currency. The second part deals with the Chinese currency and factors such as the size and openness of the Chinese economy, the analysis of the Chinese financial market, the exchange rate system and the convertibility of the yuan, which affects international currency status. The conclusion evaluates prospects for the yuan to achieve the statute of the world's reserve currency.
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Chinese Dual Exchange Rate
Kotoun, Karel ; Stuchlíková, Zuzana (advisor) ; Erbenová, Monika (referee)
The purpose of this thesis is to shed some light on the substance of Chinese monetary system of which complexity is a major obstacle for Czech entrepreneurs and tourists. It is a very rigid system, strongly overseen by Chinese Administration that uses the exchange rate as one of the main tools for achieving its macroeconomic goals, despite its tremendous costs. Therefore I deal with the essence of the Chinese monetary system derived from the monetary-archetypal experience of Chinese individuals. The first segment is focused on the history of Chinese currencies and scale systems. The second segment concentrates on a thorough understanding of the Chinese monetary system and on projections of RMB positions in the world. In addition to that, I deal with the outcomes of questionnaire survey distributed to Czech entrepreneurs commercializing with Chinese counterparts. The third segment is dedicated to the creation of an alternative monetary model based on the combination of RMB system and SDR system with a potential application on the European Union. The motivation for the selection of this topic was an immensely interesting history of Chinese money and monetary systems, alongside with my inclination towards Chinese culture spurred by my Mandarin studies.
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Selected aspects of the impact of China on the world economy
Švejnohová, Tereza ; Hnát, Pavel (advisor) ; Zapletal, Petr (referee)
With the growth of Chinese economy and its integration into international trade, China's influence on world economy as a whole has been growing too. At current growth rates, China would even have the potential to become the world's absolute power in the future. The aim of this thesis is to describe and evaluate the manner and extent of the impact of China's behavior in international trade, Chinese energetics and an undervaluation of Chinese yuan on the world economy. The world economy has a variety of economic subjects, to each of these subjects there are different implications of Chinese influence.
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