What is the relationship between the pegging of the yuan to

What is the relationship between the pegging of the yuan to the dollar and inflation in China?

Solution

The constant revaluation of the China\'s currency Yuan has inplication in the entire global economy.In 1978 , China emerged as a global power house and has achieved a GDP of avg 10 % growth. This process helped to get1.3 billion population out of its poverty line. The Chinese conomy grew upto a 5 fold times in terms of dollar. From the period of 2003 - 2013. it swas the world\'s second largest economy as it has $9.2 trillion.

China has pegged it currency to the U.S Dollar since 1994.It has removed the peg to manage the exchange rates in favour for its export transactions.This managed export rate has made China has a such trade surplus and has accumulated a foreign exchange of $ 4trillion , this setting a largest hoard in modern history.According to the reports global long term growth released by OECD ( Organization for Economic Cooperation adn Development) in 2012, the currency differences rates may have pulled China ahead of the U.S.