Closing Case - China's Exchange Rate Regime. Read the case on how China, for decades, manipulated their currency, the Yuan, to increase their exports. By constantly devaluing the Yuan currency, China was able to increase the competition for its manufactured products with lower prices.The Trump Administration signed a new trade deal with China to correct this manipulation of China's currency and to have the Chinese buy more of our products and services to fairly re-balance our deficits with them.

Despite the change with the recent new trade deal between the United States and China, the purpose for this Case Study is to understand historically how currency devaluation is a weapon to both make a country's products more competitive and cheaper,thus, increase exports. Also, the Chinese government has "Developing Nation " status that gives them more benefits against all countries (instead of being consider a fully "Industrial Nation").

The World Trade Organization, is where countries can complain on trade issues and be able to seek restitution or compensation. China has been a member of the World Trade Organization since 2001, but rarely follows the rulings against them.

After reading this Case Study, answer the following questions:

1. Why do you think that the Chinese historically pegged the value of the Yuan to the U.S Dollar?

2. Why did the Chinese move to a managed-floating rate system in 2005?

3. Is there any evidence that the Chinese kept the level of its currency artificially low in the past to boost exports?