Study On The International Legal Issues Of RMB Exchange Rate Regime Under The Background Of Trade Tmbalance Between Sino-US

Since the year of 1993 on which China for the first time gained the trade surplus over the United States, the trade balance between China and the United States has been surging year after year at an amazing speed. In 2010, the amount of such trade surplus China gained over the United States has been increased to USD 132.54 billion from the amount of USD 6.34 billion in 1993, and in 2008, such amount even once arrived at the peak of USD 170.86 billion. Under the situation that the trade imbalance between China and the United States is continuously getting worse, the United States blamed such trade imbalance on China's Renminbi currency regime, claiming that prior to the Reform of Currency Exchange System occurred in 2005 ("2005 Reform"), China adopted a called single managed floating exchange rate system which is in fact in the nature of De facto pegging system to the dollar so as to do a protracted large-scale intervention in one direction in the exchange market; meanwhile after 2005 Reform, China artificially maintained the currency of Renminbi fundamentally undervalued, thereby impeding the speed at which the Renminbi would appreciate; and such fundamental undervaluation of Renminbi by China acts as both a subsidy for China's exports and as a nontariff barrier against imports into China's territories, to the serious detriment of United States manufacturing. By such invention of Chinese government in the currency market and keeping Renminbi fundamentally undervalued above-mentioned, China on the one hand has violated its international obligations with regard to avoiding the manipulation of the currency required by ArticleⅣof IMF Agreement, on the other hand break its international obligations under the WTO rules such as dumping, subsidy, the provision of Article 15 of GATT 1994 and etc. Therefore, the United States has been forcing China to increase the value of Renminbi at a higher speed, and threatened that should Renminbi not being increased at a satisfactory speed, the United Sates would take such actions as filing a case to the Dispute Settlement Body, claiming that China has granted a prohibited export subsidy to its exports or amending its relevant national trade law so as to explicitly provide for the undervalued currency being in the nature of prohibited subsidy which may be countervailed.In particular, on Sep. 29, 2010, the bill with the number of H.R. 2378 (cited as Currency Reform for Fair Trade Act) was adopted by House of Representative of United States. The core of such bill is to amend titleⅦof the Tariff Act of 1930 so as to clarify that fundamental exchange rate misalignment by any foreign nation is actionable under United States countervailing and anti-dumping duty laws.Under the macro-background of the serious trade imbalance between China and United States and the adjusted accusations made by United States on the exchange rate of Renminbi, it is imperative and of practical significance to do a further and thorough research on the issues of RMB currency exchange from the international legal perspective in combination with the updated background above-mentioned.In this paper, guided by the main line—whether the fundamentally undervalued RMB currency exchange acts as a prohibited export subsidy, I will do detailed analysis on each international legal issue step by step. The structure of this paper is as follow:In the 1^st chapter, I at the outset point out that in reality, the issue of RMB exchange rate actually came out from a hidden macro-background (i.e. the serious trade imbalance between China and United States); and then briefly introduce some basic background information such as what is the exchange rate, what is the exchange rate arrangement, the evolution of the regime of RMB exchange rate and what is the current effective RMB exchange rate regime as well as the further reform measures China have taken since the 2005 Reform; and further do summary on the accusation with regard to the current exchange rate regime claimed by United States;The 2nd chapter is aimed at addressing the question of which organization (WTO or/and IMF) has the jurisdiction over the matter of RMB exchange rate, whether on earth WTO can govern on such case and if yes, how to cooperation with IMF on settling on this case;After the jurisdiction over the RMB exchange rate case is determined in the 2nd chapter, the substantive international legal issues concerning RMB exchange rate are talked under the 3rd chapter of this paper. Specifically, the main topics covers: whether the claims made by the United States are duly in compliance with the relevant rules under both IMF system and WTO system? Whether Renminbi is fundamentally undervalued, and if yes, whether the fundamentally undervalued RMB really acts as a subsidy to its exports.In the last part, I do summaries on my standpoints expressed in the previous three chapters, and further bring up some constructive personal advices on the solutions how to settle the disputes/difference between China and USA about RMB exchange rate.