This is due to a trade surplus with the USA. China does not want individual businesses domestically to hold onto the USD they receive from payments of exports to the USA. As the companies and holders will soon enough want to buy local currency for their business needs. This would cause a demand increase for the local currency, which would make the Chinese yen appreciate, increasing its value and price. This causes appreciation against the USD which is bad for the export business.
Revenue inequality has become a main political issue(threat) Although finding other countries to substitute manufacturing in China, the cost will be increased. Apple can use U.S people, it can help U.S economy. Apple is too heavily dependent on lower cost manufacturing in China. It there is social and political unrest in China, the manufacturing costs will be increase. This is some voice that company need to pay higher corporate tax in the U.S, where revenue inequality has become a main political issue.
Abstract: In this research, we expect that there are some relationships between exchange rate of CNY and the asset price of Chinese capital market. Some countries with low interest rate will attract many investors to borrow money, and those investors will use this amount of capital to transfer into other curries so that they can invest in that country. With more capital flowing into the capital stock market, the index measured the performance of stocks will have some changes. Somehow, the changes in the exchange rate should be able to predict the changes in Shenzhen Component Index. Using the data from some reliable resources, we would figure out the relationships between them.
a) Economic Risk Economic risk referring to the chance that macroeconomic conditions like exchange rates, government regulation, or political stability will affect an investment, usually in a foreign country. As an example, let assume Aroma Nyonya wanted to build their own branches anywhere in China to expand their production. Aside from the business risk associated with making their production profitable, Aroma Nyonya is exposed to economic risk. Where political environment might shift quickly that may lead into the significant change laws from the government of China that affect Aroma Nyonya’s ability to continue to expand branches while maximizing their products in China.
Microeconomic factors significantly affect a business, especially global expansion. Therefore, some factors to analyze and monitor are the price elasticity of goods, competition in the market and the economy state. The state of economy determines consumer spending trends. An economic downfall will lead to a decrease in consumers spending and an increase in the economy state, will escalate consumer spending. There is no doubt that competition in the U.S. is robust and is the same in China, however, Nordstrom must have the ability to choose their competitive advantage as a global expansion strategy regardless if it is suited for success in the Chinese market.
Globalization may become the potential threaten for traditional regional cultures and economics, in particular, the Chinese economy is in transition. (Zhang, p.740) On the other hand, globalization not only promotes the cooperation between countries, enforced the communication between the human beings and the world, (Zhang, p. 739) but also create the opportunities for the development of modernization. Therefore, local culture has absorbed the global culture and to achieve the goal of development itself. In other words, the global culture would not harm the local
A high inflation will depreciate the domestic currency and an increase in inflation will increase the demand for foreign goods. It also decrease export, leading to balance of payment deficit. Hence, exchange rate on the foreign base countries currency will rise which appreciate the home base currency, (Madura, 2008). He also explained the relationship using the purchasing power parity. The theory of PPP states that a basket of a good in one country should have the same cost in another country, taking into account exchange
The reason china did the reform and open up is because of the globalization, it helped china to have more cooperation with foreign countries which can let china use more foreign capital and the technologies to help the economy. Second, globalization can help to decrease the unemployment. Because of the globalization,
China realizes that in order to counter this negative perception, soft power is inevitably needed. As Chinese leaders focus on how to formulate soft power as part of its foreign policy, China has allocated a great deal of money to expand its soft power around the world. Not only to create the so-called "public image", China's soft power is also aimed at "engagement" with other regions. One important characteristic is that China is using "money" as one of its tools. Based on that explanation, the answer to "what is China's soft power?"
Economic Stabilization: Fixed foreign exchange rate ensures internal economic stabilization and checks unwarranted changes in the prices within the economy. In a system of flexible exchange rates, the liquidity preference is high because the businessmen will like to enjoy wind fall gains from the fluctuating exchange rates. This tends to Increase price and hoarding activities in country. 9. Not Permanently