Updated : Jun 12, 2020 in Uncategorized

The Role of the Currency Convergence and Diversification in the Economic Growth of China

Interest rates, foreign exchange rates, and price fluctuations are part of the Currency Convergence and Diversification. In a nutshell, it is a method of economic growth by maintaining proper exchange rates among countries. Some countries that use the technique are Canada, Hong Kong, the U.K., Japan, and others. This technique is very important to maintain the growth of the economy as well as the development of trade.

Currency

China uses the Currency Convergence and Diversification to control its economy. If China fails to keep the economic growth going, it will be a big problem for China. Also, if the market is properly balanced, it is very important to maintain the economic growth in China.

For example, if China buys US Dollars for every Canadian Dollar, then the prices in both countries may not be equal. By doing this, China can control the exchange rate and stay stable financially.

China has allowed the trend of US dollar dependence to affect the foreign trade of its trade partners. That is why some countries have turned to the Chinese currency. So, if China pays no attention to the currency exchange rate for countries like Japan, or other Asian countries, they might be affected by the weak exchange rate.

So, how does China do this? It has its own currency and continues to use it as a means of controlling the exchange rate. They have increased the amount of their money supply by a lot. The rate of their currency is now more important than any other currency’s exchange rate.

And when you compare the prices of Japanese Yen to other currencies, the cost is very expensive in China. But, the volume of the quantity of Chinese Yen is now very small compared to the dollar. That is why it is becoming more important for China to have more money to buy more dollars.

Now, it is important to understand that China is getting more dependent on the US Dollar and it may change its trading relationships with other countries. One of the major reasons behind this is that there are so many offshore Chinese banks that are around the world. These banks have been created to help the Chinese people who do not have enough money. But, the next step is that these banks must be able to help China solve their problems.

So, in order to allow more monetary growth in China, China needs more money in order to buy more dollars. If they are still using the greenback as their currency, there will be a great threat that the dollar will be surpassed by another currency.

Without more money to buy more dollars, the country cannot grow, which will affect its economic growth. Thus, it is very important for the US to help China continue to use their own currency, which is called the Yuan.

It is not only about using the Yuan to trade with other countries, but the Yuan is also used in China. It is a national currency used in China, and it is considered a big asset.

The Yuan can be exchanged to other countries that need more money, as long as it helps the country grow economically and is useful for economic growth. The dollar may not necessarily lose to the Yuan, because the US economy has a good amount of economic growth, but it also has plenty of currency in circulation. It will be helpful for the US, when the Dollar decreases in value.

The Euro, the British Pound, and the Canadian Dollar can be used as well. It is very important for China to use its own currency, because of the fact that it may affect the economic growth of the country.