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U.S.-China Exchange Rate Negotiation: Stakeholders' Participation and Strategy Deployment

Published online by Cambridge University Press:  20 January 2017

Emily Yixuan Cao ,
Yong Cao ,
Rashmi Prasad  and
Zhengping Shen
Emily Yixuan Cao
Affiliation:
Duke University
Yong Cao
Affiliation:
University of Alaska Anchorage
Rashmi Prasad
Affiliation:
University of Alaska Anchorage
Zhengping Shen
Affiliation:
Xuzhou Normal University
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Abstract

Exchange rates influence a country's trading capability, foreign reserves and competitiveness. Recently, the exchange rate between the Chinese RMB and the U.S. dollar has been a contentious issue in both the United States and China. In this paper, we conduct a historical review of how the United States deployed negotiation strategies with China on the exchange rate issue and consider the degree to which it follows theoretical expectations. We then analyze the changing nature of the factors which shape exchange rate negotiations between the two nations in projecting alternative scenarios for the future of conflict resolution between the U.S. and China on this issue. We predict that the U.S. is likely to continue alternating between competition and collaboration, a negotiation cycle influenced by U.S. domestic politics, and China is less likely to continue with accommodation and compromise. The sequencing and timing of each nation's negotiation strategy will lead to widely divergent consequences for the management of exchange rates and the world economy.

Keywords

dollar-yuan exchange ratenegotiationpolitical game
Type
Research Article
Information
Business and Politics , Volume 13 , Issue 3: Special Issue: The Domestic Foundations of IPE: The U.S. Case in Current and Historical Perspective , October 2011 , pp. 1 - 23
Copyright
Copyright © V.K. Aggarwal 2011 and published under exclusive license to Cambridge University Press 

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