Financial Studies (Jul 2014)
A STUDY OF CHINESE YUAN (RMB) APPRECIATION ACCOMPANYING WITH OTHERS FACTORS INCLUDING FOREIGN DIRECT INVESTMENT (FDI) AND THEIR EFFECT ON CHINA ECONOMY
Abstract
The Chinese Yuan (RMB) has been on the trend of appreciation over the last decade, and such a trend will likely be continuing for some years over the next decade. According to some scholars in their published literatures, the appreciation of RMB, the influx of Foreign Direct Investment (FDI) has been ongoing accompanying the sustained growing economy in mainland China over the past decade. It is believed that the China economy has an implication from some significant factors including appreciation of RMB, interest rate of RMB, inflation and continuous increase of FDI for the next several years. The present study aims to provide an emphasis on investigation into effect on China economy as a result of appreciation of RMB and FDI together with some other factors, and to provide an outlook on the economy in China for the coming decades. First, a review was carried on relevant background information and development history of RMB and FDI. There are many reasons and factors behind leading to the sustained growth in the economy in China in the last decade and such effects were in coverage in the literature review. An overview of the development of RMB exchange mechanism, and other variables including (1) RMB exchange rate, (2) China interest rate, (3) Foreign Direct Investment (FDI), (4) Trade Balance of China, (5) Annual Inflation rate in China, (6) Energy Consumption in China, (7) Foreign Exchange Reserve in China, (8) China wages, (9) China External Debt and (10) China Consumer Price Index, which may have effect on the growth of the economy in China is covered in the literature review conducted in Chapter 2.
