China-U.S. Currency Conflict: The Economic and Legal Implications

• Published in: International Journal of Research in Business and Social Science Vol. 5; no. 6; pp. 40 - 50
• Main Authors: Albasoos, Hani, Al-Hadhrami, Hanan
• Format: Journal Article
• Language: English
• Published: Istanbul Society for the Study of Business and Finance 01.01.2016
• Subjects: American dollar; Currency; Economic conditions; Economic policy; Exports; Fixed exchange rates; Foreign exchange rates; International relations-US; International trade; Legislators; Renminbi; Research methodology; Tariffs; Trade deficit; Trade surplus; United States > US; China
• ISSN: 2147-4478
• DOI: 10.20525/ijrbs.v5i6.575

This research paper underlines the root of this argument and how china's currency policy has affected both economics of U.S. and China. Many economists have emphasized on the appreciation of RMB as an important factor to attain the trade balance. However, this research argues that the appreciation is not going to matter. Pressure has been put on Obama's Administration to push China to appreciate its currency and to designate China as a "currency manipulator". Several Bills have been introduced to discuss this issue. From a legal perspective, two entities could tackle this issue. They are the World Trade Organization (WTO) and the International Monetary Fund (IMF). However, IMF lack legitimacy and leverage and WTO has no jurisdiction over the exchange rate. So, none of these entities could handle the currency issue. Therefore, this paper analyzes some possible solutions such as Omnibus Act, tariffs, import quotas and forming new legislation. Where, it concludes that the best solution could be via forming a new international agency.