East Asia’s Foreign Exchange Rate Policies

By Michael F. Martin on July 16, 2009

Financial authorities in East Asia have adopted a variety of foreign exchange rate policies, ranging from Hong Kong’s currency board system which links the Hong Kong dollar to the U.S. dollar, to the “independently floating” exchange rates of Japan, the Philippines, and South Korea. Over the last few years, the value of the U.S. dollar has generally declined against most major currencies, although the U.S. dollar has rebounded against some currencies in recent months. It is possible that U.S. complaints of “currency manipulation” and pressure on one East Asian government to alter its exchange rate policy may foster resistance from other East Asia governments that have adopted similar exchange rate policies. This report explains different exchange rate policies in East Asia and their implications for U.S. trade policy in the region.

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Peony Lui
Topics: 
Business
Economy
Politics
Keywords: 
Exchange Rates
Finance
Trade
Currency
Renminbi
Organization: 
Congressional Research Service

Human Rights in China: Trends and Policy Implications

By Thomas Lum, Hannah Fischer on July 13, 2009

Human rights has been a principal area of U.S. concern in its relations with the People’s Republic of China (PRC), particularly since the violent government crackdown on the Tiananmen democracy movement in 1989. Some policy makers contend that the U.S. policy of engagement with China, especially since granting the PRC permanent normal trade relations status in 2000, has failed to produce meaningful political reform. Others argue that U.S. engagement has helped to accelerate economic and social change and build social and legal foundations for democracy and human rights in the PRC. This report analyzes China’s mixed record on human rights—major human rights problems, new human rights legislation, and the development of civil society, legal awareness, and social and political activism. While the report discusses major areas of interest, it does not provide an exhaustive account of all human rights abuses or related incidents.

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Peony Lui
Topics: 
Law
Politics
Society
Keywords: 
Human Rights
Civil Society
U.S.-China Relations
Political Reform
Dissidents and Activists
Organization: 
Congressional Research Service

China’s Dictators at Work: The Secret Story

By Jonathan Mirsky on July 2, 2009

Prisoner of the State is the secretly recorded memoir of Zhao Ziyang, once holder of China’s two highest Party and state positions and the architect of the economic reforms that have brought the country to the edge of great-power status. The book has had much attention in the West. Inside China, despite official attempts to denigrate and block any news of it on the Internet, it is already having a powerful effect. This effect will increase as Chinese tourists from the mainland buy the Chinese edition of the book in Hong Kong.

Broad Money Demand and Asset Substitution in China

By Ge Wu on July 1, 2009

Recent changes to China's financial system, in particular ongoing interest rate liberalization, gradual movement toward a more flexible exchange rate regime, and rapid development of capital markets, have changed substantially the environment in which monetary policy operates. In light of these changes, we estimate an error correction model using a General-to-Specific methodology and confirm that a stable broad money demand function exists taking proper account of asset substitution, with an income elasticity of less than unity. Current inflation is found to have a significant negative impact on the real money demand. However, money demand does not appear very sensitive to interest rates, possibly reflecting their partial liberalization. Changes in the exchange rate also do not affect money demand significantly, but expectations of a further renminbi appreciation since 2005 appears to induce more money demand. Stock prices are statistically insignificant despite recent investors' interest in equity markets.

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Topics: 
Economy
Keywords: 
Finance
Monetary Policy
Organization: 
International Monetary Fund (IMF)