Will the YUAN rise: The Chinese Story

Will the Chinese currency rise or remain pegged to the dollar? NJIT Professor Michael Ehrlich examines this issue from its historical perspective as well as from the point of view of the Chinese government.

Michael Ehrlich, PhD, had an international business career before joining NJIT's School of Management as assistant professor of finance. Ehrlich's research focuses on financial markets and institutions, with an emphasis on market failures. His current interest has been the unintended consequences of financial market innovation with special attention to structured investment vehicles, the financial investment innovation which grew to more than $400 billion worldwide before collapsing in the current 2007-2008 financial crisis. Earlier this year, Journal of Corporate Accounting and Finance and The American Economist published his views on the structure of financial markets and foreign exchange risk.

Ehrlich spent his last Wall Street years at Bear Stearns as senior managing director of the emerging markets fixed income business. Earlier stints included positions of increasing responsibility at Lehman Brothers Kuhn Loeb and Salomon Brothers, where he worked in the Government Arbitrage group with John Meriwether. Upon leaving Wall Street, Ehrlich started FineStar Imaging LLC, a small technology company that specialized in document production and management. He sold FineStar in 2007.

Today, along with teaching, Ehrlich participates in NJIT's small business incubator program, the Enterprise Development Center (EDC). Ehrlich, who belongs to the New York Angels, works with start-up companies.

Ehrlich received his doctorate from Princeton University in economics with a specialty in finance. His bachelor's degree is from Yale University.

Category:

Education

Tags:

• NJIT
• SOM
• Newark
• NJ
• new
• jersey
• institute
• technology
• school
• management
• economics
• yuan
• renminbi
• China
• economy
• balance
• trade
• treasury
• bonds
• united
• states
• US
• USA
• wall
• street
• america

[04591739]

Always wondered what people meant when they accused the chinese government of currency manipulation. This explains it very clearly and concisely. Thanks.

[IAmTheAfrodisiac]

The Chinese definitely want to appreciate the value of the RMB, but they are taking into consideration factors such as their current positioning on the Value Chain (How fast their industries can move from current low-quality manufacturing to a innovation-led economy), Domestic Consumption and various other factors that are conducive for a high exchange rate. Once the Chinese Economy moves from mostly low-cost manufacturing to innovation and product differentiation, the RMB would appreciate.

[IAmTheAfrodisiac]

Fantastic presentation on the RMB Currency Prof. I agree with you on China raising the value of the RMB, however I am a little more skeptical on the time frame that this would occur.

China is very well aware of what happened to Japan during the Plaza Accord, which lead to Japan suffering 2 decades of poor economic performance which they call the "Lost Decades".

That is one of the main motivations behind why China does not cave in to US Pressures over a quick re-valuation of the RMB.

[ymhktravel]

It takes 2 hands to clap. While he pushes the blame to China for USA current problems, he fails to mention that USA has herself mostly to blame for their own misfortunes. Eg. over-borrowing by citizens who don;t even have the money to repay, failure to save ( but spend on borrowed money) etc. Technology and factories are exported/outsourced out of USA because profit-making USA firms see short term gain but no long term foresight, a protracted war etc. has led to USA current situation too.

[tubehemlock]

Bravo Prof Ehrlich for the plan speak on the RMB US$ issues. As someone who has traveled to China for almost 20 years I have seen the locals get fatter (literally and figuritivly). I have been an advocate to keep US Politics out of the currency issue. If we forced a value change it would only make American pay a few dollars for clock radios and cheap goods. As opposed to what the clueless politicians says, the forced change in valuation will not have US factories make these products anyway

[lppoqql]

Look at it this way, China have the population, thus the market, and manufacture capacity, Chinese have a higher average IQ than America, and eventually China will also lead in technology, so long term China will pass the US Economy.

Also, the quality of the Chinese made products are poor because the people who sell them to the US wants them to be cheap and low quality, so we have to buy more and we are cheap, it is not that the Chinese are unable to produce high quality products.

[JaisenJames]

I hope NJIT knows how lucky they are to have a professor like Mike Ehrlich teaching there!