Since China ended a peg of its currency to the US dollar in July 2005, the Renminbi (RMB) has appreciated, with an accumulated rate of more than 18 per cent during a period of two-and-a-half years up to the time when this chapter was written in June 2008. However, the issues on whether, how and to what extent will the nominal rate of the RMB be further revaluated remain unsolved. This chapter has two objectives. First, it attempts to examine the so-called Mundell-Stiglitz conjecture that a considerable revaluation of RMB will affect the Chinese economy adversely, yet have little impact on the balance of payment in the United States. Second, it attempts to examine the sectoral impact of the RMB revaluation on the world economy in general, and on the Chinese economy in particular.
China's Integration with the Global Economy: WTO Accession, Foreign Direct Investment and International Trade p. 141-157