China's Exchange Rate Policy, Its Current Account Surplus and the Global Imbalances

Author: Max Corden, W.¹

Source: The Economic Journal, Volume 119, Number 541, November 2009 , pp. F430-F441(1)

Publisher: Blackwell Publishing

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Abstract:

This article is stimulated by current criticisms of Chinese exchange rate policy. The concern is really about China's current account surplus. The article discusses the factors that determine the surplus, and the reasons why the surplus increased sharply from 2005. The international implications of China's surplus and growth are discussed, and how it has affected the world real interest rate, and through that the US current account deficit. The surplus has had various international relative price effects, which have produced both gainers and losers. Finally, the surplus played only a small part in determining the world credit crisis.

Document Type: Research article

DOI: 10.1111/j.1468-0297.2009.02319.x

Affiliations: 1: University of Melbourne

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