Conflicts in Global Currency Regulations The Case of Chinese Currency Devaluation Policy

Abstract

In the area of international trade, currency and exchange rate play a pivotal role newlinebut generally it has been mostly neglected by the researcher and lawmakers. Even newlinewhile entering into any international treaty the lawmakers seldom discuss any newlinepotential threat of currency manipulation by any party of the treaty. The evolution newlineof Chinese currency policy of devaluation against US dollar has invoked so many newlinediscussions among jurists, economists and policy makers. Being the largest newlinetrading partner of China, United States is particularly concerned about the newlineChinese currency devaluation as its market is flooded with cheaper Chinese goods newlineand its trade deficit with China has been growing faster than ever. This trade newlinedeficit is an obvious burden on the US economy which is already struggling to newlinecome out of the recessionary trends. newlineThere is a close nexus between currency manipulations and international trade. A newlinecase of currency manipulation challenges the very subsistence of the international newlinecurrency regime and trade regime. Recently business world has seen numerous newlinecases of currency manipulations including the well-known case of (alleged) newlineChinese currency devaluation. According to an estimate currency manipulations newlineaffect the flow of currencies worth $1.5 trillion per year. As it has been alleged by newlinethe United States that the policy of keeping the currency artificially devalued by newlineChina has the potential to make Chinese products cheaper and more competitive newlinein the United States, simultaneously it makes the US products costlier in the newlinedomestic market of china. This price differential harmed the business of United newlineStates as the demand of the products manufactured by the United States declined newlineand its manufacturing sector suffered very heavy losses. This loss has translated newlineinto millions of job losses in manufacturing sector of the United States which has newlineworsened the sufferings of the United States.