A China Gazer’s Random Musings – No. 1

Amb. Kishan S. Rana (retd), Emeritus Fellow, Institute of Chinese Studies, Delhi

There is such a cascade of writing on China that as an oldie, I am attracted by the notion of penning personal reactions, reflections, and observations. Few of us can claim special insights into a country marked by both opacity and paradox. The longer one studies China, deeper is a typical realization that what one understands is a fraction of the things that remain unknown, even unfathomable. I plan to write this column perhaps once a month.

The 19th Party Congress Looms

For an authoritarian regime, China has a remarkable leadership transition system, which has worked smoothly for the past 30 years. Party congresses of the Communist Party of China (CPC) are held every five years. The even numbered Party Congress is when a new General Secretary and his leadership team take over; the country’s key decision-making team is the Standing Committee of the Politburo (it used to number 9, reduced to 7 in 2012). The General Secretary holds office for 10 years. The odd-numbered Congress is the one where appointments are made to the central committee and the full politburo, in preparation for the leadership change five years down the line.

Thus, the 19th CPC which meets in October 2017 is the in-between session when central committee and politburo members are appointed. It is crucial because that team plays the key role in the appointment of the next leader at the 20th Congress.

Recent months have seen sizeable re-shuffle in the top positions in the 31 provinces, Continue reading “A China Gazer’s Random Musings – No. 1”

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How Can China Deal with Pressure to Devalue the Renminbi?

Zhang MingPhD, Director in the international investment research office of the Institute of World Economy and Politics, Chinese Academy of Social Sciences (CASS), Beijing

A version of this article was originally published in the Business Standard as How China can resist devaluation pressure’, 29 July 2017. This is part of a series by Chinese economists facilitated by the ICS.

In July 2005, People’s Bank of China announced it was implementing a managed floating exchange rate system based on market principles and with reference to a basket of currencies.

From the end of June 2005 to the end of July 2015, RMB exchange rate against the US dollar rose to 6.12 from the previous 8.28, appreciating by about 26% (Figure 1). The RMB nominal effective exchange rate (NEER) and real effective exchange rate (REER) indices appreciated by 48% and 57% respectively over the same period (Figure 2).

That the appreciation of the REER of RMB exceeded its NEER indicates that the inflation level in China during this period was higher than the global average. Continue reading “How Can China Deal with Pressure to Devalue the Renminbi?”