Trade War Between U.S. and Research Paper

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This is troubling, because these two different viewpoints increase the odds that some kind of: currency or trade war will take place in the future.

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The Motivations behind China's Currency Policy

The original reasons why China had their currency pegged against the dollar is: that it provided stability and it allowed the country to sell low cost imports in markets where there was a large amount of consumers (i.e. The United States). Over the course of time, this helped China to be able to adapt to the changes that are taking place in the world economy. as, they quickly became one of the largest importers for: a variety of manufactured goods. However, as time went by it became clear that the country was keeping their currency artificially low. This was a part of an effort to help the nation to: build up their currency reserves (through large trade surpluses) and begin to establish some form of long-term economic development. Once this began to occur, it meant that a shift took place in this relationship, as China began to: experience consistently rising trade surpluses and deficits at the expense of their trading partners. This led to calls that China was engaging in a new form of mercantilism by: artificially keeping their currency low. These different elements are important, because they are showing how China is using this as way to: help increase their reserves and wealth.

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as, they are: reluctant to remove the peg and believe that it could cause severe damage to economic growth. Because of these reasons, China has become very inflexible in: their approach and how it will influence economic activity moving forward. As a result, the nation has been continuing to embrace this policy to: achieve their different objectives and deal with the various issues that have hindered economic growth. (Carbaugh, 2008, pg. 473) (Chow, 1987, pg. 286)

China's Growth in the World Market

The Chinese government implemented a major economic reform program in 1978, after reducing state control of all production assets. Government officials urged the formation of: rural enterprises / private businesses, liberalized foreign investment / trade, allocated various resources from government to private entities (i.e. privatization) and they invested in education / training for workers. Many of these supply-side factors pushed the country to meet the demands of a dynamic economy. as, the government's strategy; worked much better than they had expected.

Before 1978, the Chinese economy had seen an annual growth of 6%. However, post-1978, China began to experience average real growth of more than 9%. This was a steady line of growth, as opposed to.....

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