Having recovered from my equilibrium in front of the United v Chelsea match (delighted with the result in terms of the title race - anyone but Man U please!), here's an article on the Chinese fixed exchange rate.
That is, as mentioned in lectures, China fixes its exchange rate at a particular value against the US dollar, and intervenes on the foreign exchange market (where people offer and and buy the Chinese currency or the US currency). One of the advantages of this is to give certainly to companies that export or import, since prices will stay fixed.
The Chinese may be prepared to loosen it provided that the US agrees with it on sensitive political matters such as Taiwan and Tibet.
On the other hand, the US has a law that permits it to decide certain countries are "currency manipulators", and it is likely that these kinds of movements and indications made by China are attempts to avoid being categorised as a manipulator...
This blog accompanies the econ101ab Principles of Economics course given at the University of Birmingham. The lecturers for both parts of the course (101a, microeconomics and 101b, macroeconomics) will occasionally post here on matters related to lecture material. We hope to show the relevance of the concepts we are teaching at each stage of the course for helping understand how the world works...
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