1. WHY IS CONTROL OF THE RENMINBI CONTROVERSIAL? PEI-LING LIU NILAR THEIN ARTURO PEGUERO

2. OUTLINE Current Situation Current Situation Why RMB devaluated Why RMB devaluated Conclusion Conclusion

3. CURRENT SITUATION 1 USD = 6.162 RMB 1 USD = 6.162 RMB

4. CURRENT SITUATION Fluctuation History Fluctuation History

5. EFFECTS OF CONTROL POSITIVE EXPORTS EXPORTS UNEMPLOYMENT RATE UNEMPLOYMENT RATE GROWTH RATE GROWTH RATENEGATIVE INTERNATIONAL PRESSURES INTERNATIONAL PRESSURES NOT FOR DOMESTIC ECONOMY REFORM NOT FOR DOMESTIC ECONOMY REFORM RMB INTERNALIZATION RMB INTERNALIZATION EXPECTATION EXPECTATION

6. SOURCE OF CONTROVERSY Forcefully keeping RMB undervalued Forcefully keeping RMB undervalued Countries argue it gives China an unfair advantage in exports against countries with free floating currencies Countries argue it gives China an unfair advantage in exports against countries with free floating currencies Unfair Increased competitiveness (Cheap) of Chinese products in international markets Unfair Increased competitiveness (Cheap) of Chinese products in international markets

7. LETTING GO Appreciation of RMB: Appreciation of RMB: Good for domestic economy reform: Good for domestic economy reform: Domestic Consumption Domestic Consumption Growth Rate Growth Rate RMB internalization RMB internalization

8. REASONS TO LET GO Economy reform Economy reform Stable society Stable society Environment protection Environment protection

9. REASONS TO LET GO Avoid Future Crashes Avoid Future Crashes RMB Undervalued RMB Undervalued Balassa-Samuelson Relationship (economic theory) Balassa-Samuelson Relationship (economic theory)

10. Thank you