...high rate averaged at nearly 10% annually. Due to this enormous growth, China now influences the economy of virtually every country all over the world. This is more apparent and frightening, considering the United States’ economic relationship with China. Until 2005, China pegged its currency to the U.S. dollar, but as from July 2005, it linked its currency to other currencies rather than dollars and let its currency appreciate by 2.1%. The central bank of China did this by buying and selling the dollar dominated assets in exchange of printed Yuan in order to eliminate excess supply or demand for the Yuan. Due to this, the exchange rate between the dollar and the Yuan, basically, remained constant irrespective of changes in economic factors which could have otherwise destabilized the Yuan relative to the dollar. Since these reforms, China has continued manipulating its currency to its advantages, such as giving exporters an unfair trade advantage. This paper will provide an analysis of China’s Yuan against the U.S. dollar for the past 5 years ending in 2010. Also, the exchange-traded fund (ETF) of Yuan is discussed in depth. Recently, the U.S. policymakers had been having debates over China’s currency policy. The policy adopted by China has been linked to the rapidly growing United States’ trade deficit with China and the decline of employment in the U.S. and the emergence of China as a major economic power. The U.S had been claiming that the Yuan is undervalued with respect to...
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...an OANDA currency simulation game to enhance my knowledge on international currencies through currency trading. As an individual I started out with $100,000 US dollars, and I traded over $75,000 with more than five different foreign currencies. Also, during the simulation I made over 12 round-way transactions. This report is going to explain the currency concepts I learned over this simulation, my major transactions during the game, and information on the international financial market through this time period. Currency Concepts Before the currency trading began Professor Tang taught about the foreign exchange market. I learned how foreign exchange is an exchange of one currency to another currency, and we need foreign exchange for five major reasons. The five reasons consist of international traveling, international business, international investment and speculation, international financing, and cross-border activities. The foreign exchange market, like I participated in, is usually undertaken in over-the-counter markets, and is the largest financial market in the world with over $3.98 trillion USD turnover a day. This game taught me about why/how individuals participate in currency trading. In order to exchange the different currencies, I had to learn the quotations for them. A foreign exchange quotation is a statement of willingness to buy/sell at an announced rate. There is either a direct or indirect quotation. A direct quote is a home currency price of...
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...around the world plummeted on Thursday, signaling that investors have not gotten over the shock of China’s devaluation last week and remain nervous about the health of the global economy. The selling began in Asia, punishing Chinese stocks once again. It then moved to Europe, walloping markets in Germany and Italy, and ended with a rush for the exits in the United States. Along the way, the price of oil traded near six-year lows and currencies of developing countries suffered further pain. Astonishingly, the currency of Kazakhstan lost a fourth of its value against the dollar after the country’s government let it trade freely in the markets. Continue reading the main story RELATED COVERAGE Traders outside the New York Stock Exchange. The bull market is showing its age, analysts say.Fair Game: Doubt Starts Chipping Away at the Market’s Mind-SetAUG. 14, 2015 Workers in Tiananmen Square on Friday in Beijing preparing the area for a large military parade on Sept. 3 to commemorate the 70th anniversary of the end of World War II. The devaluation of the renminbi should give a boost to Chinese exporters.China’s Currency Stabilizes After 3-Day SlideAUG. 14, 2015 The devaluation of the renminbi, nearly 2 percent against the dollar, may help revive the Chinese economy.Global Selling Shows Concerns About China’s WeaknessAUG. 11, 2015 “It was a bad day — everything came together,” said Howard Silverblatt, senior index analyst at S.&P. Dow Jones Indices. Mr. Silverblatt noted that...
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...throughout the Pakistan • China wants that the Iran Pakistan gas pipeline should be extended to the northern countries • Job opportunities for Pakistani people specially in undeveloped areas like Baluchistan Conclusion No doubt that the PCEC (Pakistan China Economic Corridor) will provide new opportunities and new possibilities for the economic development of Pakistan and China. But there are also some implications in this like law and order issues in Pakistan but all in all it’s a project of great importance especially for Pakistan. We can conclude it as following • It’s a gateway for china to expand its trade using a short routes to the gulf and African countries • This program faced challenges throughout its life like killing of Chinese engineers etc. but still both countries show mutual co-operation and did not allowed...
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...1. Was Beijing Jeep a success? After the Chinese reform and openingup policy led by Deng Xiaoping, China attracted many foreign direct investment because China aims to increase their economic growth, infrastructure, technology and other industries. During that time, the only way a foreigner company could enter the Chinese market was through a joint venture and this is how Beijing Jeep emerged in 1984. It was a huge step that an American firm could extend their business to one of the biggest markets in the world, however we consider that Beijing Jeep was not successful in China, because during this period, the economy of China was not stable and the Chinese market was not able to purchase this type of goods. Also, when the joint venture started, the production of vehicles was difficult compared to their expectation, due to different perspectives related to the production line. One of the main challenges was the foreign exchange to pay for the import of the kits coming from United States, because the Chinese government did not allow the export of hard currency. Beijing Jeep could continue their production line because they reached an agreement with the Chinese government to eventually release hard currency. Besides, they get a high support from them as investment in infrastructure and require ordering Jeeps when ...
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...promotion However, during the late 1990’s, as the competition in the logistics business in china intensified, both FedEx and UPS started emphasizing on promotion to attract Chinese customers. Till the late 1990s there was a marked distinction in the approach of FedEx and UPS towards advertising and promotion in China. FedEx followed an approach which emphasized on heavily publicizing its services offering in China. It launched intimidating ad campaigns to attract customers. One of the ad’s showed the tail of a FedEx plane parked in front of a forbidden city saying, “ Call FedEx , it’s almost forbidden not to.” FedEx stressed on promoting its service offerings and enhancing brand awareness among the customers in China. For this purpose, it hired a popular media partner, OMD based in Hong Kong. On the other hand UPS emphasized less on advertising because it preferred to project itself as a local company, but still it held up a six-week T.V campaign the company displayed a motorized three wheeler, a large van, a brown UPS truck and a boeing 747 moving together on an air strip in a line representing its global image rather than showing it as an American company. To target Chinese customers outside the country, UPS sponsored the Chinese new year celebrations in Vancouver and Toronto, where many Chinese immigrants resided. UPS also...
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...Sher-Wood Hockey Inc. Group Research Project One Global Logistics Management Executive Summary Sher-Wood is one of Canada’s most respected most innovative market and valuable brand in the hockey equipment industry founded in 1949 with its headquarters located in Sherbrooke, Quebec. Sher-Wood Hockey has multiple viable opportunities for reaching new demographics, market expansion, and lowering manufacturing costs for the hockey stick sector of the company. In 2013 Canada cut import tariffs and duties on hockey gear between 2.5% and 18%, this reduction causes the landed costs of importing to decrease. Outsourcing manufacturing also allows for currency hedging contract to be made between Chinese partners and Canada to protect themselves against unexpected changes in currency exchange rates [1]. The only way the firm can keep their hockey sticks at a competitive price point and still make a profit is to engage in outsourcing their manufacturing of hockey sticks to China as mentioned previously. Sher-Wood hockey’s decision to begin full outsource of manufacturing for their hockey sticks in 2011 was an method to maintain their competitiveness in the global hockey stick market, the Standardization Administration allows Sher-Wood Hockey Inc. the ability to lower production costs while still maintaining confidence that their products will be delivered with high quality standard. China is an optimal environment for Sher-Wood to outsource their production efforts to because of...
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...Evolutionary Game Zhenyuan Zhu School of Management Tianjin University, Tianjin, 300072, China j_j8797@yahoo.com.cn Abstract: Under the assumption of low rationality, this paper establishes the Evolutionary Game model between the supervision departments of third-party payment and operators of third-party payment platform, studying the replicator dynamics equations and the procedure of dynamic evolutionary. Also it draws the conclusion that there is no evolutionary stable strategy based on the analysis of Jacobian Matrix. Furthermore, this paper gives strategies concerning both colonies to regulate the third-party payment market. Keywords: evolutionary game, third-party payment, financial supervision I. INTRODUCTION With the web technology and E-commerce thriving across the mainland, the expanding speed of Chinese third-party payment market (hereafter be shorted as “the Market”) has accelerated to a striking level. According to the Report on Development State of Chinese Online Payment Industry 2010-2011 conducted by www.iresearch.cn, the Market’s trading scale has raised to 353.7 billion RMB during the fourth quarter of 2010, increasing 129.4% year-on-year and 32.6% period-on-period. [1] Meanwhile the governmental supervision of third-party payment platform (hereafter be shorted as “the Platform”) remains vacant, leaving a risk of misappropriation with the numerous amount of sedimentary money preserved by the Platform. Furthermore, the impact of virtual currency on realistic...
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...soaring exports and huge investments in buildings, roads and cities — goes on even in the face of frequent warnings from government officials and private specialists about asset bubbles, excessive bank lending and an overheating economy. “Right now, the economy is growing at the upper limits of what is acceptable,” said Li Lianfa, an economist at Peking University. “The government is facing a lot of challenges.” Chief among them are balancing the supersize growth and heavy investment, and trying to distribute the riches as evenly as possible. Analysts say the government is determined to keep the economy revving, but is also wants to prevent anything from spoiling the party before 2008, when Beijing is to play host to the Olympic Games. To help cool the economy, Beijing has raised interest rates and pressured banks to temper lending, with some results. Fixed-asset investment slowed in the latter part of last year, for instance, and economic growth in the last months of 2006 slowed from a feverish second-quarter pace of 11.5 percent. Many economists are now forecasting that Beijing will take additional steps, possibly raising...
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...soaring exports and huge investments in buildings, roads and cities — goes on even in the face of frequent warnings from government officials and private specialists about asset bubbles, excessive bank lending and an overheating economy. “Right now, the economy is growing at the upper limits of what is acceptable,” said Li Lianfa, an economist at Peking University. “The government is facing a lot of challenges.” Chief among them are balancing the supersize growth and heavy investment, and trying to distribute the riches as evenly as possible. Analysts say the government is determined to keep the economy revving, but is also wants to prevent anything from spoiling the party before 2008, when Beijing is to play host to the Olympic Games. To help cool the economy, Beijing has raised interest rates and pressured banks to temper lending, with some results. Fixed-asset investment slowed in the latter part of last year, for instance, and economic growth in the last months of 2006 slowed from a feverish second-quarter pace of 11.5 percent. Many economists are now...
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...time they set foot in China as a retailer, but they wanted to make further progress in their penetration of the Chinese market. Their short-term goal is to have annual revenues from China reach $4 billion in sales. Their investment in marketing and endorsements related to the 2008 Beijing Olympics was $150 million. Part of this cost included sponsoring the Chinese teams. There were 28 different sports in the Olympics, and Nike sponsored the Chinese teams in 22 of them. That is a significant percentage. The global strategy it applied was to form partners with Chinese manufacturing companies to manufacture the goods. All of Nike’s production comes from the 785 contract factories it has all over the world, including China. The modes of market entry it used would be a “Transnational Strategy” because with the games, Nike also opened up Nike Stores that offered products in athletic areas most popular with the local population. They also opened up “Super Stores” with similar product listing of that of the U.S. market. Prices were also scaled down to local currency rates to match the competitors pricing and the local population affordability. The complicating factors the company faced were competition from its biggest rival, Adidas. Adidas spent $40 million more than Nike on the 2008 Beijing Olympics. Adidas also edged Nike by signing endorsement deals with the Chinese athletes that ensured that if any of them were to win a medal, upon receiving the medal, they would be dressed in...
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...The Geopolitics of China China is a land shaped by its history; a country that has suffered great calamities and more than anything else, has grown. China “boasts a civilization at least three thousand years old” (Hutton, 2007) and is a home for more than 1.3billion people. It covers over 5,000 kilometres of land in East Asia, and is surrounded by powerful neighbours – Vietnam, India, North Korea, Russia and more. While Northern China is subarctic, South China experiences sub-tropical climates. The Eastern side of the country, following the East China Sea, as well as the Yellow Sea, is comprised of mainly low lands; China is much more heavily industrialised towards the north-east (Hutton, 2007), whereas, the West hosts more mountains. Most countries are historically known for using their boarders and coast lines as defensive mechanisms, conversely though, China is known for tactfully moving in-land and using its terrain for defence; which form up to two thirds of China’s land (Gaddis, 2005). Will Hutton argues that China has “burst back on to the world scene in a manner parcelled in scale and speed in world history only by the rise of the United States.” It first endured a “century of humiliation” (Lecture). Opium Wars dominated China in the 1840s until 1860, after which the Taiping Rebellion – a civil war, revolting against the Quing Dynasty took place, closely followed by the Boxer Uprising – a rebellion provoked by imperialist expansion (Gaddis, 2005). Looking at this...
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...Case 2: CHINESE MERCANTILISM Text 1. Chinese New Year China has become a major financial and trade power. But it doesn’t act like other big economies. Instead, it follows a mercantilist policy, keeping its trade surplus artificially high. And in today’s depressed world, that policy is, to put it bluntly, predatory. Here’s how it works: Unlike the dollar, the euro or the yen, whose values fluctuate freely, China’s currency is pegged by official policy at about 6.8 yuan to the dollar. At this exchange rate, Chinese manufacturing has a large cost advantage over its rivals, leading to huge trade surpluses. Under normal circumstances, the inflow of dollars from those surpluses would push up the value of China’s currency, unless it was offset by private investors heading the other way. And private investors are trying to get into China, not out of it. But China’s government restricts capital inflows, even as it buys up dollars and parks them abroad, adding to a $2 trillion-plus hoard of foreign exchange reserves. This policy is good for China’s export-oriented state-industrial complex, not so good for Chinese consumers. But what about the rest of us? In the past, China’s accumulation of foreign reserves, many of which were invested in American bonds, was arguably doing us a favor by keeping interest rates low — although what we did with those low interest rates was mainly to inflate a housing bubble. But right now the world is awash in cheap money, looking for someplace to...
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...Study Guide Test #3 Chapters 8, 9, 10, and 11 Chapter 8 *One of the essays at the end of this Study Guide will be used on the exam. You did these for homework last week. Please also know the definition of Gold Standard Fixed Exchange Rate Floating Currency Exchange Rate Balance of Payments (BOP) Chapter 9 International Strategy Competitive Advantage Strategic Planning Value Chain Analysis Mission Statement Vision Statement Values Statement Scenarios Contingency Plans Varying Strategies and Challenges in Walmart Minicase: The Globalization of Walmart. We discussed in class. Summary of International Planning Process - New Direction in Planning from McKinsey Observations Chapter 10 Organizational Design Organizational Structure International Division Hybrid Organization Matrix Organization Strategic Business Unit Virtual Corporation Horizontal Corporation Subsidiaries Affiliates Transfer Pricing Chapter 11 Global mindset Leadership Competencies for Global leadership Team norms 1. Briefly outline the advantages and disadvantages of the gold system. The gold system is simple, imposes monetary discipline on nations, and is widely trusted. On the other hand, gold is unwieldy, especially with large trade flows, it has holding costs and security costs, and it does not generate interest. 2. Was the Bretton Woods system bound to fail if it were successful? (this helps with #1) This question goes to the Triffin Paradox. <para...
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...BOFIT Discussion Papers 19 • 2011 Zhichao Zhang, Nan Shi and Xiaoli Zhang China’s new exchange rate regime, optimal basket currency and currency diversification Bank of Finland, BOFIT Institute for Economies in Transition BOFIT Discussion Papers Editor-in-Chief Laura Solanko BOFIT Discussion Papers 19/2011 23.7.2011 Zhichao Zhang, Nan Shi and Xiaoli Zhang: China’s new exchange rate regime, optimal basket currency and currency diversification ISBN 978-952- 462-714-6 ISSN 1456-5889 (online) This paper can be downloaded without charge from http://www.bof.fi/bofit Suomen Pankki Helsinki 2011 BOFIT- Institute for Economies in Transition Bank of Finland BOFIT Discussion Papers 19/2011 Contents Abstract ................................................................................................................................................ 3 Tiivistelmä ........................................................................................................................................... 4 1 2 Introduction ................................................................................................................................ 5 Theoretical model ..................................................................................................................... 11 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 3 Policy goal .................................................................................................................... 12 Trade...
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