When China’s monetary policy is analyzed, one thing stands out presently – there is a continued incline in importation of products into China at a rate higher than the exports growth. Secondly, after the peg of the Chinese Yuan to the dollar, the Chinese currency’s real trade-weighted value declined. This is notable mostly since the beginning months of 2002, at a time when the US dollar reached its peak value.
China is a great economy in the making. At this point in time, the metrics of China’s currency are largely undervalued and others unlisted. China’s Current Account has been growing at a steep surplus since 2007. For instance, the current account ran at US$17 billion last budget year as compared to US$4.6 billion in 2001. That is giant leap in just six years. This ensues in a 1.5 percent growth in Gross Domestic Product, an outstanding feat for such a massive economy. To realize how big the growth is in China, as other countries go under in the global economic crises, let us compare two more years, 2003 and 2004. China’s economy ran a trade surplus on the Current Account, of an amazing US$32 billion in the year 2004 as compared to a surplus of US$25.5 billion in 2003.
This is indicative of some thing being done right in China’s economy. Experts feel that this kind of growth rate is unsustainable due to the heightened pace as evidenced by the