Revaluing the Yuan -- A Long Road to Revaluation
Sources: WSJ.com research, China's National Bureau of Statistics, U.S. Census Bureau, International Monetary Fund (IMF)
Jan. 1, 1994: China devalues yuan by 33% against U.S. dollar and begins using a "controlled floating rate system." Special currency for foreigners and international trade, called Foreign Exchange Certificates, are removed from circulation. China pledges goal of eventual full currency convertibility.
January 1995: U.S. Treasury says China is no longer a currency manipulator, reversing a years-long stand.
July 2, 1997: Thailand devalues the baht, sending regional currencies into free-fall, sparking the Asian financial crisis.
September: U.S. Treasury Secretary Robert Rubin suggests yuan undervalued, saying, "it'd make more sense" for China to buy U.S. goods rather than accumulate foreign-exchange reserves, then at $130 billion.
January 1998: Premier Zhu Rongji (left) pledges yuan will remain stable on eve of meeting U.S. Deputy Secretary of Treasury Lawrence Summers. U.S. official travels to region to shore up confidence in currencies, including yuan.
May: Strongman Indonesian President Suharto resigns after mounting public protests, ultimately stemming from country's currency crisis.
June: U.S. Treasury Secretary Robert Rubin praises China as one of world's "sources of stability" for resisting pressure to devalue.
Dec. 11, 2001: China enters World Trade Organization. Terms include no references to exchange-rate system.
2002: U.S. records bilateral annual trade deficit exceeding $100 billion with China for first time.
January 2003: Inflation data mark end of five-year bout with falling prices in China, including outright deflation in 2002.
May: China balance of payments data for 2002 first time ever show "hot money" inflows rather than capital flight.
July: U.S. Federal Reserve Board Chairman Alan Greenspan (right) implies Chinese exchange rate should be adjusted up, saying fixed rate will breed inflation and is "something they'll have to address."
September: U.S. convinces G-7 Finance Ministers to issue statement calling for "more flexibility in exchange rates ... based on market mechanisms," a barb directed at China. U.S. Treasury begins "intensive engagement" with China to push for yuan flexibility.
October: Congressional appointed U.S.-China Economic and Security Review Commission says yuan 15% to 40% undervalued.
October: People's Bank of China raises official interest rates for first time in nine years to stem fast-gaining inflation.
March 2005: Premier Wen Jiabao (left) says objective of yuan reform is to create "market-based, managed and floating-exchange rate." Adds, yuan reform could "come around unexpectedly." National People's Congress endorses Mr. Wen's call for crackdown on excessive investment and switch to "appropriately tight fiscal policy."
April 29: China yuan trades outside of usual exchange rate band for nearly 20 minutes.
May: U.S. Treasury Secretary John Snow warns China could be relabeled currency manipulator if no flexibility emerges before November.
May: System launched in Shanghai allows Chinese banks to trade in world currencies at international exchange rates, although yuan not included.
June: U.S. Senators Lindsey Graham and Charles Schumer shelve effort to slap 27.5% tariff on imported Chinese goods, citing reassurance from Messrs. Greenspan and Snow China will soon adjust exchange rate.
July 21: China announces that it has revalued the yuan by 2.1% to 8.11 per dollar, and abandons greenback peg in favor of a basket of currencies. Malaysia abandons its peg of the ringgit to the dollar in favor of a managed float. |
