EXCHANGE RATES AND CHINESE DEVELOPMENT

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• Professor Zhang Hejie, Zhejiang University of Technology, Hangzhou, China
• Tuesday 06 May 2008, 17:00-18:30
• St Garden Room.

If you have a question about this talk, please contact Angels Varea.

ABOUT THE TALK

Professor Zhang Hejie will talk about the RMB (Chinese currency) exchange rate and its importance for the understanding of Chinese development. This issue raises many questions in the world and especially in developed countries. With the opening of the Chinese market, there are international and national crises often impacting on the Chinese Economy and this will damage Chinese development. Chinese macro economic development strategy demands that the RMB exchange rate stability be maintained, avoiding great changes.

One main aim of exchange rate policy is to maintain a stable real effective exchange rate. But, there is a less effective exchange rate which can be fitted into the Chinese pattern of economy. A country should design its policy measures in order to adjust its exchange rate when the market has biased its exchange rate aim－real exchange rate.

The key of designing an exchange rate regime based on a basket of currencies is how to endowed concrete weights per currency in a basket of currencies. A small country will suffer from most loss of any policy aims if it only considers a basket of currencies as the traded weight. The theories on how to choose the weights of a basket of currencies have been at the probing or exploratory stage at present. Our contribution is having put modified relative labor productivity progress indicators into the weights of a basket of currencies. The new model can consider the exchange rate mechanism from the viewpoint of both commercial and capital markets; this makes the model more robust against national and international crises. Finally, it should facilitate harmony in society in China and promote Chinese Development.

ABOUT THE SPEAKER

Professor Zhang Hejie, is a professor in the College of Business Administration of Zhejiang University of Technology, Hangzhou, China and a Visiting Fellow in St Edmund’s College and the Department of Land Economy. His research interests include the RMB Exchange Rate Regime, Financial Institutions and Sustainable Development. Among his publications are ‘Building RMB Effective Exchange Rate Index and Weight in China’, Chinese Social Science Publishing Press, June 2005; ‘Researches on Chinese Financial Institute Risk Mechanics and Reform Route’, Chinese Social Science Publishing Press, Jan 2004; and ‘The Value of Bioecology’, Chinese Taiwan Maochang Publishing Press, March 1996.

This talk is part of the Workshop on Poverty and Development series.

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• St Garden Room

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