The economic environment of China and Canada

RMB appreciation will in fact lower inflation and under standard economic theory, lower exports. So when the US$ depreciates, China has an opportunity to adjust the RMB.In summary, China's currency manipulation has resulted in significant trade surplus and inflation, but an appreciation of their currency could lower inflation and potentially decrease exports. This strategy aligns with China's long-term economic goals, and they may only adjust their currency valuation in response to changes in circumstances.
  • #1
anuse10
Hi folks, I am a first year MBA student taking an Economics course. My colleagues and I are having trouble learning by just poring over books, so instead I change my learning process by facilitating discussion online, incorporating business knowledge to my daily life.

China, in my preception, is experiencing a significant inflation as the government is maintaing an undervalued currency exchange rate. A low exchange rate results in a hefty trade surplus. What if there is an appreciation of RMB? My professor said such appreciation would push down inflation and according to Philip's curve, would spur a tepid output and heighten unemployment. Why would the appreciation of dollars push down inflation?

Canada, when compared to US, has a lower trade surplus as the loonie is firting greenback with parity. Despite a sign of recovery after the recession in 2010, locals are pessemistic about the outlook of the economy. Some analysts even note that there would be a double dip recession.Bank of Canada governor, Mark Carney, still carry out the monetary policy of increasing money demand by holding interest rate to as low as 1%.

My professor pointed out that Japan did a China a favor by purchasing European bonds. How did that happen?
 
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  • #2
Welcome to PF anuse10. You've presented several different topics. What would you like to focus on - China or Canada?
 
  • #3
The China issue seems to be more interesting. Please make any comments as you wish.

The question begged by my professor is quite challenging. Hope someone can shed light on it.
 
  • #4
anuse10 said:
Hi folks,

...


as the loonie is firting greenback with parity.

Hello anuse10,

Where are you from? I'm having a bit of trouble understanding you. But it looks like something Woolie would say, so I'm guessing England.
 
  • #5
I am from Hong Kong and am studying in Toronto, Canada. Perhaps I make it wrong and should put it as "Loonie flirts parity with US greenback". I learned that expression from TorontoStar.

What I mean in that clause is that the currency of Canadian dollar is rising against US dollar. Please correct me if I am wrong.

I am curious where you are from? :)
 
  • #6
anuse10 said:
I am from Hong Kong and am studying in Toronto, Canada. Perhaps I make it wrong and should put it as "Loonie flirts parity with US greenback". I learned that expression from TorontoStar.

What I mean in that clause is that the currency of Canadian dollar is rising against US dollar. Please correct me if I am wrong.

I am curious where you are from? :)

Interesting connections to Britannia you have there.

But this is getting too GD, so let me try and get myself back on track:

Who is the Loonie that the TorontoStar was referring?

I am from Portland http://en.wikipedia.org/wiki/Oregon_Country" , USA.
 
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  • #7
We are so close to each other eh? Sometimes we call Canadian dollar lonnie.

You know what? We should be discussing the US-Canadian economy as it is closely tied to our daily life LoL
 
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  • #8
anuse10 said:
China, in my preception, is experiencing a significant inflation as the government is maintaing an undervalued currency exchange rate. A low exchange rate results in a hefty trade surplus. What if there is an appreciation of RMB? My professor said such appreciation would push down inflation and according to Philip's curve, would spur a tepid output and heighten unemployment. Why would the appreciation of dollars push down inflation?

China has been positioned for more than a decade to gain factory orders - that is maximize factory output to increase exports - and acquire foreign currency. This foreign currency has been reinvested broadly and includes natural resources, R&D, and to purchase US securities.

China operates on a long term strategy basis - they will probably not address their currency valuation until their plan is met or possibly as a short term adjustment to circumstances.
 

1. What is the current economic relationship between China and Canada?

The economic relationship between China and Canada is strong and continues to grow. China is Canada's second largest trading partner, and Canada is China's 11th largest trading partner. In 2019, the total bilateral trade between the two countries was valued at $96.4 billion CAD.

2. How does the economic environment of China impact Canada?

The economic environment of China has a significant impact on Canada. China's rapid economic growth has led to an increase in demand for Canadian exports, particularly in natural resources such as oil, gas, and lumber. Additionally, China's large population and growing middle class present opportunities for Canadian businesses to expand into the Chinese market.

3. What are the main challenges in the economic relationship between China and Canada?

One of the main challenges in the economic relationship between China and Canada is the issue of trade imbalances. China exports more goods to Canada than it imports, leading to a trade deficit for Canada. Another challenge is the ongoing tensions between the two countries, particularly in relation to human rights and political issues.

4. How has the recent trade war between the US and China affected Canada's economy?

The trade war between the US and China has had a mixed impact on Canada's economy. On one hand, it has created opportunities for Canadian businesses to fill the void left by US companies in the Chinese market. On the other hand, Canada's close economic ties with the US have also resulted in some negative impacts, such as increased tariffs on Canadian goods exported to the US.

5. What are some potential future developments in the economic relationship between China and Canada?

Some potential future developments in the economic relationship between China and Canada include the ratification and implementation of the Comprehensive Economic and Trade Agreement (CETA) between Canada and China, which aims to increase trade and investment between the two countries. Additionally, there may be further collaborations in areas such as renewable energy and technology, as both countries seek to transition to more sustainable and innovative economies.

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