Currency War of China - Research Paper Example

In connection to this, this paper provides detailed information on the effects of World War II to China’s currency. In doing that, it expounds on the Japanese presence in China and their effect on the economy as well as how the war between the Chinese currency and Japanese currency led to confusion of China’s currency. It also details on the activities that were carried out by the Japanese and their effect to China. The paper also expound on how silver affected the economy of China alongside explaining how the U.S. control of IMF led to currency issues in China.

The paper expound on not only the effects of Cultural Revolution in 1966, but also on the effects of Post-Bretton Woods. Additionally, the paper also provides detailed information on not only what currency wars have brought to China, but also on how China will act differently if WWIII will be a currency war. Currency wars are terms used in referring to the manipulation of currencies with the intention of boosting exports. “On the other hand, currency war (competitive devaluation) is a condition in international businesses where countries compete with in opposition to each other with the intention of achieving relatively low exchange rates for their own currency” (Rickards 111).

The term currency war was launched in September 2010 by a Brazilian Finance Minister referred to as Guido Mantega. According to him, emerging markets were experiencing challenges from not only depreciation of U.S. dollar, but also through undervalued Chinese renminbi (RMB). A week later after the coining of the term “currency war,” the President of France by name Nicolas Sarkozy also placed a reform of the international monetary system on top of the agenda of the G20 under France’s chairmanship with the aim of ensuring the International Monetary Fund (IMF) and other competent organizations launch diverse host to discuss on the same issue. It was