Hina as a developing global powerhouse, its effects on the global marketplace and the US economy.

The paper will focus on China as a devleoping global power and the emergance of Chinas global competitiveness, its effect on the US economy and what the future holds considering China grows to fulfill its proficy of becoming the worlds biggest economy.


The paper will focus on the Yuan and what a revaluation of the Yuan will mean for Chinas domestic markats and subsequently what effect that will have on the US Greenbackand the US balance of trade in the long-run. concordantly, how do US interest rates, Oil prices, US financial markets relate to the Chinese economy. an interesting relation can be made by addressing the fact that China holds over $700 Billion US of American government bonds and evaluate how that relates to exchange rates. Another factor to focus on is how attractive will US securities become in the long-term as Chinas and Asias financial markets and rates of return become more attractive.

Ultimately, the paper is to address the long-term factors and outcomes.

The dissertation can address some of the following points that I have included:

-China needs to float their Yuan for their economy to become developed and their country to evolve from subsistence. The fact that the yuan is pegged keeps wages low and keeps china as a low wage nation meaning the country will not allow its citizens to live in a developed nation where social programs exist, healthcare is world-class and benefits can be utilized. Infrastructure might develop due to foreign direct investment but that does not mean living standards and pay grades do not improve.

- Instead, China persists to keep a strangle hold on companies dependent on China s production capabilities and improving technologies by pegging the Yuan and deflating the value of the US dollar by purchasing hundreds of billions worth of t-bills(currently at $715billion) and adding to the growing pain the is the current account deficit.
-although providing fuel for improving business productivity and potential for growth through the ability to outsource production and services, china still suppresses the value of the US dollar containing the Yuan within its national borders and only allowing limited float of the Yuan around the world, In turn, this means that China receives FDI in US dollars and uses those US dollars to purchase securities, commodities and t-notes around the world, thus creating a demand for the currency in the country which China chooses to invest.

-China s ultratight capital controls mean money cant move freely into the country -or out. And its certainly not interested in making its exports expensive enough to slow down a rip-roaring economy that needs to absorb 10 million new workers a year.

-USA s answer is protectionism; excise taxes on imports, specific tariffs, and tariffs on volumes.

-possibly a comparison b/w current china exchange rates and those of Japan of 80 s in boom and how they are similar and if china can result in a similar crash.

- shanghai exchange has negative return of weighted index for 2005, and prior to that as well.
-possibly find relation b/w china and US economy in terms of outsourcing, imports and FDI.
China a Value-Added exporter? Like Bangladesh& .

I have included a list of sources that might be helpful:

Bremner, Brian. (2005, July). The Yuan: A Baby-but Key-Step. Business Week Online. Retrieved November 12, 2005, from Business Week Online Database

Bremner, Brian, Dawson, Chester, Shameen, Assif, Ihlwan, Moon. (2005, August). The Yuan is Growing Up. Business Week, 3946. Retrieved November 12, 2005, from Academic Search Premier Database.

Browning, E.S. (2005, July 25). Yuan Move Might Stir Big Ripples. The Wall Street Journal,
p. C1, C4.

Engardio, Pete. (2004, October) Untying the Yuan Would Get China Out of a Bind. Business Week, 3904. Retrieved November 12, 2005 from Academic Search Premier. Database.

Ghosh, Palash. (2005, July) Will  Hot Money Chase the Yuan? Business Week. Retrieved November 17, 2005 from Business Week Online Databse.

Hubbard, R. Glenn. (2005, May 2). Magic Capital Ride. The Wall Street Journal, p. A18.

Kadlec, Daniel. (2005, August). The Yuan and You. Time, 166(5). Retrieved November 12, 2005 from Academic Search Premier Database.

Karmin, Craig. (2005, August 5). Yuan Move Rekindles Excitement about Asia. The Wall Street Journal, p. C1, C12.
Mandel-Campbell, Andrea. (2005, August). The China Bubble. MacLean s, 118(34). Retrieved November 12, 2005 from Academic Search Premier Database.

Rosen, Daniel H. (2003) Don t Pick on China. China Economic Review, 14(2), 91-93.

Seddighi, H.R. and Nian, W. (2004). The Chinese stock exchange market: operations and efficiency. Applied Financial Economics, 14, 785-797.

The World Bank. (2005) China Data and Statistics. Retrieved January 25, 2005, from The World Bank Group. Web Site: CHINAEXTN/0,,contentMDK:20601872~menuPK:318976~pagePK:1497618~piPK:217854~theSitePK:318950,00.html#1

Xinhua News Agency. (2005, January). China s Banking Industry. Xinhua Economic News Service. Retrieved November 13, 2005 from Academic Search Premier Database.