The disquisition on the trend of China''s Renminbi exchange rate under the Asian financial crisis.

• Main Authors: Kuo Fang Shan, 郭芳杉
• Other Authors: Wei Ai
• Format: Others
• Language: zh-TW
• Published: 1999
• Online Access: http://ndltd.ncl.edu.tw/handle/78798197468120194556

碩士 === 淡江大學 === 財務金融學系 === 87 === This paper is describing the Mainland China''s management framework of foreign exchange reserves by using the analysis of historical orthogenesis. Before the regime reform in 1978, there are few interactions between the bulwarks of China and the capitalism countries. The foreign exchange policy isn''t considered but little discussing in the trade business with the socialism countries. After the regime reform, China evolved the economy by ushering in the foreign direct investment (FDI) and the advanced technology. The Renminbi exchange rate problem came up and became the first thing to solve in all price reforms. China''s management framework of foreign exchange reserves acclimated the foreign trade business exserting the trade inside settlement exchange rate in the cost base. By 1986, foreign trade corporations in China were allowed to buy back a certain amount of their foreign exchange earnings based on a retention quota－a move that led to the establishment of foreign exchange adjustment centres (FEACs), where enterprises could adjust their retention quotas. China then began using a dual exchange rate system, with the government fixing an official exchange rate and the FEACs determining market rates or swap rates. The foreign exchange retention and quota system were abandoned in January 1994 and the dual exchange rates converged. This resulted in the official exchange rate depreciating from 5.8 RMB/USD to the FEAC market rate of 8.7 RMB/USD, representing a 33% decline. The convergence of the two rates significantly increased the efficiency of foreign exchange management by the monetary authority. The People''s Bank of China (PBoC), China''s central bank, continues to closely monitor the unified managed floating rate to smooth out any large fluctuations. China effectively made an effort to clarify its guidelines on establishing the market economy when it unified the dual exchange rates in early 1994. The new regulations also paved the way for the convertibility of the Renminbi for current account transactions, scheduled to take effect by the end of 1996, four years ahead of the original schedule. By the numbers, China is a bastion of stability amid Asia''s economic turmoil: Its currency is stable, its foreign reserves are huge, and its trade surplus is rising. But look closely, and China''s apparent economic strength drains away. Foreign investment in China is falling, and the trade surplus is expected to dwindle next year as exports slow and imports rebound－trends already aggravated by the turmoil elsewhere in Asia. Add in China''s delay in economic reform and rising unemployment, and the nation is facing its most volatile mix economic malaise since the late 1980s. For while its neighbors'' woes may make Beijing more cautious about opening its financial markets－full convertibility of the Renminbi has been put off until well into the next century－China''s problems are driving it to undertake structural reforms as bold as any in Asia. China will not relax controls on capital account transactions in the near future. Under "one country two system", the integration of the Renminbi and Hongkong dollar will be the vital issue in the next century in China. The monetary integration will follow the economic integration. How to pull up the difference of the recognition of the economics and politics to a community will depend on the China''s lasted effort on the regime reforms. Not only the people between the straits but also the people all over the world would expect the success of the China''s reforms.