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• Teaching Note | HBS Case Collection | May 2006 (Revised November 2019)

  To Float or Not to Float? In Pursuit of the Chinese Dream

  Laura Alfaro, Rafael M. Di Tella and Ingrid Vogel

  Keywords: China;

  Citation:

  Alfaro, Laura, Rafael M. Di Tella, and Ingrid Vogel. "To Float or Not to Float? In Pursuit of the Chinese Dream." Harvard Business School Teaching Note 706-060, May 2006. (Revised November 2019.)  View Details

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• Case | HBS Case Collection | November 2019

  Floating the Exchange Rate: In Pursuit of the Chinese Dream

  Laura Alfaro, Sarah Jeong, Laura Alfaro and Sarah Jeong

  In the decades following 2005, China faced significant financial challenges. Inflation spiraled upwards and China’s economy stagnated in the wake of the Global Financial Crisis. The country’s leaders took an interventionist approach to weather the storm, controlling capital and exchange rates. These actions raised criticism from other nations, and in 2017 the U.S. initiated the U.S.-China Trade Wars, which enforced tariffs and requirements for increased transparency. As implications of the trade wars remained uncertain, many wondered whether the central bank would introduce further discreet steps to change the yuan. Would China’s currency appreciate as substantially against the U.S. dollar as predicted by economists? And when would further change occur? The stakes were high; a freer yuan float would impact groups within and outside of China very differently. Would China’s currency then be allowed to depreciate or appreciate if fundamentals required it?

  Keywords: exchange rate; inflation; debt; Currency Exchange Rate; Inflation and Deflation; Borrowing and Debt; China;

  Citation:

  Alfaro, Laura, and Sarah Jeong. "Floating the Exchange Rate: In Pursuit of the Chinese Dream." Harvard Business School Case 320-039, November 2019.  View Details

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• Case | HBS Case Collection | November 2019

  Floating the Exchange Rate: In Pursuit of the Chinese Dream

  Laura Alfaro, Sarah Jeong, Laura Alfaro and Sarah Jeong

  In the decades following 2005, China faced significant financial challenges. Inflation spiraled upwards and China’s economy stagnated in the wake of the Global Financial Crisis. The country’s leaders took an interventionist approach to weather the storm, controlling capital and exchange rates. These actions raised criticism from other nations, and in 2017 the U.S. initiated the U.S.-China Trade Wars, which enforced tariffs and requirements for increased transparency. As implications of the trade wars remained uncertain, many wondered whether the central bank would introduce further discreet steps to change the yuan. Would China’s currency appreciate as substantially against the U.S. dollar as predicted by economists? And when would further change occur? The stakes were high; a freer yuan float would impact groups within and outside of China very differently. Would China’s currency then be allowed to depreciate or appreciate if fundamentals required it?

  Keywords: exchange rate; inflation; debt; Currency Exchange Rate; Inflation and Deflation; Borrowing and Debt; China;

  Citation:

  Alfaro, Laura, and Sarah Jeong. "Floating the Exchange Rate: In Pursuit of the Chinese Dream." Harvard Business School Case 320-039, November 2019.  View Details

  CiteView DetailsEducators

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