The Influence Of US Dollar Depreciation On China Economics And Countermeasures

Since the collapse of the Bretton Woods system, as the dominant in the worldcurrency, the US dollar is becoming weaker in a long process. During this time, with theeconomic crises and the domestic economic policy adjustment, the dollar was strongerat several times, but the dollar has never come back to the beginning of the end of theWorld War Ⅱ. this is America’s own reasons, such as always pursues the free economyof US authorities who have always failed to come up with effective economic stimulusplan to solve the problem of domestic unemployment and the huge fiscal deficits; Onthe other hand, also one of the more important factor is that the relative stability of theinternational situation after the war, which prompt other major capitalist countries haveanother chance to develop their economics vigorously. In the1970s, with the recoveryof major nations’ economics, it also makes the Deutsche mark and the Yen quicklybecame a worldwide currency, once a serious threat against the dollar, the Plaza Accordis an example.Since the1990s, the dollar exchange rate was rising from1996to2001, but itbegan to rapid devaluation from2002, the dollar/yuan rate began with8.27from earlyin2002down to6.09at the end of2013, down more than a quarter. As the largesttrading nation, overall a weaker dollar, on the one hand, it not only lead to continue toincrease the pressure on the appreciation of the RMB but also lead to the problem isincreasingly prominent of the earning management to the foreign exchange reserves; Onthe other hand, in terms of effectiveness of monetary policy, industrial structureadjustment, it also a far-reaching influence on the economic development of our country.Therefore, since the collapse of the Bretton Woods system, the trend of US dollar, itsdomestic economics and politics certainly have a significant impact for theeffectiveness of the monetary and industrial restructuring of China. At the same time, italso has a certain enlightenment for the internationalisation of the RMB. On this basis,China should continue to carry out the relatively independent monetary policy, steadilypromote the reform of RMB exchange rate system, strengthen the management offoreign exchange reserves, establish strategic resource reserve system and increase theinvestment to real economy overseas, etc.