Reference no: EM13304632

Using data for foreign exchange rates in the USD and the RMB, and focused the year between 2005 through 2010.

This research focused on China's economic expansion and increasing trade surplus with the United States which ongoing debate on the appreciation of RMD and its impact on ETF not only among USD but also world currency included in the domestic finance of China.

In the year of 2012, China executed merge and acquisition between U.S. large corporations, such announced in the media as: 

“Fox and Wanda finalizing deal to co-produce movies in China

20th Century Fox is finalizing a deal to co-produce movies in China with Dalian Wanda Group, the Chinese conglomerate that finalized its $2.6-billion purchase of U.S. theater chain AMC Entertainment this week.”

September 7th, 2012

Also other M&A between China and US, DreamWorks Animation announced on few months, they plans to build a studio in Shanghai, inwhat the Glendale-based company billed as a landmark agreement with two state-owned Chinese media companies. 

With an initial investment of $330 million, the Shanghai studio would develop original Chinese animated and live-action movies, TV shows and other entertainment catering to the China market. The deal was among several business ventures announced in downtown Los Angeles during an economic forum attended by visiting Chinese Vice President Xi Jinping, who is widely expected to be the country's next leader.

Those transactions had become the world’s sensation and should change the ETC foreign currency movement in the trading volume of spot transaction in foreign exchange market and economics in United States, and China has restricted the local currency’s movement to a very tight range around the current level of 6,82 RMB to a USD since July 2008, 

In a global economy with deficient aggregate demand, current-account surpluses are a problem. But China's current-account surplus is actually less than the combined figure for Japan and Germany; as a percentage of GDP, it is 5%, compared with Germany's 5.2%.

Many factors other than exchange rates affect a country's trade balance. A key determinant is national savings. The US's multilateral trade deficit will not be significantly narrowed until it saves significantly more; while the recession induced higher household savings, this has been more than offset by the increased government deficits.

According the data from Federal Reserve Bank in Unites States, the RMD and the USD exchange rate recorded between 2005 through 2010 listed as below:

 

30-Dec-05 8.0702

29-Dec-06 7.8041

31-Dec-07 7.2946

31-Dec-08 6.8225

31-Dec-09 6.8259

30-Dec-10 6.6

End of the year 2005, the RMD is trading below the 8.1 per dollar mark, marking stabilities for the currency, year by year continuous gain since before the financial crisis began in the fall of 2008. Unsurprisingly to many, the move comes right before the country’s Vice Premier is expected to meet with U.S. Treasury Secretary Timothy Geithner, helping to take some wind out of America’s sails in regards to calls for further appreciation of the RMD against the dollar. 

The history of economy in China, over this half decade, the world took special attention toward the movement of ETF china currency, but yet for sure the regime in China’s currency movement. Moreover nation prepared for inflation which ever growing problem, and China hired reserve ratio requirement on the ETF currency exchange, and many economist remarked RMD for their faster currency appreciation to “The central bank is tolerating faster currency appreciation to contain import costs.” If China follows through on this strategy, it could bring about a marginally higher RMD sooner than when most people originally thought”

China has restricted the local currency's movements to a very tight range around the current level of 6.82 RMD to a U.S. dollar since July 2008, apparently to protect the country's exporters and the millions of jobs they provide. 

However, international pressure has mounted on China in recent months to allow the RMD appreciate, with economists also saying that a stronger RMD -- also known as a yuan -- would even alleviate inflationary pressures on the Chinese economy. 

American Prominent Economist –JosepyStiglitz illustrated concern about ETF Chinese currency that  The RMD has strengthened 21% against the dollar from 2005 to 2008, and the end of year 2010, the RMD exchange rate became 6.6 to $1 USD and China economy expanded 11.1% in the first of 2010, and expanded 9%for the whole year. 

The analysis between 2005 through 2010 would assume that China moved up on the world number two stage and already overtaking Japan. 

According to projections by the world bank, soon or later will overtake the United States,

For my conclusion of research for ETF currency of China, it has important role for the U.S. economy not only virtue of their fast surplus movement of the currency but even more importantly from what might be termed impact to global trading market and how leading together with United States. 

China EFT created a strong impetus and encouraged economic globalization, which resulted seem to be heavily weighted impact. The appreciation of Chinese currency has become conspicuously slanted money capitalism and high finance.    

In this world portfolio, I would like to against any of high-risk, high return, fast movement of economic competition, or/and financial manipulation, because it would create 1% of winners and large majority of losers. Even a position of number one country, but they are not stable economic and it necessary continue competing until last man standing. 

Therefore, it would necessary to enter some argue that China needs to adjust its exchange rate to prevent inflation or bubbles. Inflation remains contained, but, more to the point, China's government has an arsenal of other weapons (from taxes on capital inflows and capital-gains taxes to a variety of monetary instruments) at its disposal.

But exchange rates do affect the pattern of growth, and it is in China's own interest to restructure and move away from high dependence on export-led growth. China recognizes that its currency needs to appreciate over the long run, and politicizing the speed at which it does so has been counterproductive. 

Moreover, starting a bilateral confrontation is unwise.

Since China's multilateral surplus is the economic issue and many countries are concerned about it, the US should seek a multilateral, rules-based solution. Imposing unilateral duties after unilaterally labelling China a "currency manipulator" would undermine the multilateral system, with little pay-off. China might respond by imposing duties on those American products effectively directly or indirectly subsidized by America's massive bailouts of its banks and car companies.

No one wins from a trade war. So America should be wary of igniting one in the midst of an uncertain global recovery – as popular as it might be with politicians whose constituents are justly concerned about high unemployment, and as easy as it is to look for blame elsewhere. Unfortunately, this global crisis was made in America, and America must look inward, not only to revive its economy, but also to prevent a recurrence.

Attachment:- 232630_2_explanation---ECONOMICS-RESEARCH-PROJECT.doc