Causes Of US Dollar Depreciation And Influence On China Economic Development

In the past two years, the U.S. dollar exchange rate to principal currency drops constantly on the international foreign exchange market. From the beginning of 2002 to the present, the amount of decrease of U.S. dollars to European dollar is up to 22%. The advantage U.S. dollar leaves weakly that has caused the extensive concern of common people. Devaluation of U.S. dollar was facilitated together by many kinds of factors. Objective factor – the imperfect basic side of American economy cause the denominational value of U.S. dollar on the high side back to the normal position; policy factor -- to promote the export and prevent the deflation in order to stimulate the economic growth. The drop of the U.S. dollar exchange rate will bring influence on economic development of the world. Having the pros and cons simultaneity as to American oneself, in the long run it can help American economy to increase continually and steadily. The present U.S. dollar weakness can promote the competitive power of the American export product in the international market, reduce the trade deficit, strengthen the profit ability of the enterprise, and help American economy to increase continually and steadily. However, unfavorable factors can't be underestimated either. Firstly, the rises of import commodity price cause the domestic price rise in U.S.A and assaults the American economic recovery. Secondly, the dropping of US dollars exchange rate reduce foreign capitals, bring the negative effect to the investment market in U.S.A.. It is Japan and European Union mainly to bear the cost of the adjustment of U.S. Japanese yen and European dollar will appreciate to reduce the competitiveness of its export product correspondingly, therefore bring the adverse effect to the exports and even the economic growth. In addition, U.S. dollar may make the growth of the economy of East Asia slow down further. Taking one with another, U.S. dollar leaving weakly brings new variable for economic recovery of the world. Thinking generally, it will produce a series of relatively obvious and even far-reaching influence on the economic development pattern of the world. U.S. dollar will leave continuously weakly shortly, but it is impossible to present the devaluation by a large margin. From looking medium and long-term, because economic strength of U.S.A. and growth potential are much higher than European Union and Japan, the function that U.S. dollar reserves currency mainly as the world can not change and U.S.A. will not waver as the status of the international capital haven. This U.S. dollar devalues is only one of the tactics as macro economic policy of American economic development, U.S. dollar will also rebound again, U.S.A. will continue pursuing the advantage U.S. dollar policy, U.S. dollar still occupies the key position in the international monetary system. Opening to the outside world constantly and incorporating our country with the international economy, the devaluation of U.S. dollar must exert an influence to the economic development of our country too, pros and cons coexists. The exchange rate of our country nails the exchange rate of U.S. dollar basically and there are relatively stable relations between RMB and U.S. dollar, it usually waves along with US dollar in the narrow scope, the US dollar devaluation also implies that RMB depreciates to other currency to a certain extent, it can accelerate the export from China to the areas that do not use US dollar as currency; accordingly, the export from China to the areas that use US dollar as currency is promoted indirectly for the price advantage to the contrary areas. On the aspect of capital flowing, US dollar devaluation can also encourage foreign capital flow into China. Therefore it is a favorable news to China's economy that U.S. dollar devalues, namely be expected to continue expanding export, absorbing the foreign capitals, And then speed up the acceleration rate of the foreign exchange reserve, at the same time, it can expand the Chinese international trade surplus and make a great o...