China's Renminbi

Problem Statement
China is under pressure to revalue its currency, the Renminbi (RMB), from US policy makers and the decision will affect the economic stability of adjacent countries.   Should China give in to the demands or keep its currency at the current rate?

Near the 20th century China was subjugated by foreign powers and became an economically and politically powerless nation.   The totalitarian party developed with increasing influence within the country and they single-handedly united the national government with economy for the first time.   In the early stages, China had considerable levels of progression of labor-intensive exports with a massive increase of inflows of foreign capital and domestic savings.   In 1997 China’s GDP enlarged to 8.8 percent and in 1998 it grew to 7.8 percent (K.C.Fung, and Wong, 2008).   This is astonishing, considering the negative impact of progression for the neighboring countries at this time.  
People’s Bank of China (PBoC) is the main source of currency and the innermost financial institution for the country.   The affairs of the Bank of China are foreign currency and international accounts. The China’s Central Bank developed interest rate cuts to promote spending by enterprises and households; however, prices fell.   With China’s refusal to devalue its currency in 1997, there was a negative impact in the exporters segment; therefore, the government created policies to stimulate exports.
In the 1990s China’s economy returned to its healthy expansion, and the government forecasted an annual growth rate of 8-10 percent by the end of the decade.   The Gross Domestic Product (GDP) of China grew to 8.8 percent by 1997 and 7.8 percent by 1998 and sustainability by 1999. (See table 1)   By 1998, exports increased by 0.5 percent while imports decreased by 1.5 percent.   By 1999, exports fell by 5.3 percent while imports increased by 15.3 percent. Because China’s exports were less competitive in contrast to imports from...