Policy elites in the political economy of China's exchange rate policymaking

How Proximate and ‘Meta-Institutional’ Contexts Shape Institutional Change: Explaining the Rise of the People's Bank of China

“…The PBC has also been more assertive in policy terms since the mid-1990s, especially when it helped crunch a major outbreak of inflation and engineer a soft landing in 1996. It has also complemented its anti-inflation focus by pushing for a degree of exchange rate liberalisation and flexibility and in successfully arguing for a non-devaluation strategy in the wake of the Asian financial crisis, an event that led Leong Liew to argue that the central bank had become ‘the most influential ministry in economic affairs' (Liew, 2004, p. 50). Reflecting his ideas of a more market-determined RMB to aid the effectiveness of monetary policy, the PBC and its governor, Zhou Xiaochuan (Zhou et al , 1993), managed to weather domestic debate on RMB revaluation, and eventually convinced the leadership to shift to a partial liberalisation of the exchange rate regime in 2005, a major move that saw the RMB appreciate 20 per cent against the US dollar by July 2008.…”

Interest Group Influence in Authoritarian States

“…The top leaders' exchange rate decisions are informed by the input they receive from various government bureaucracies, particularly the Ministry of Commerce (MOC); the People's Bank of China (PBOC), the central bank; and the National Development and Reform Commission (NDRC). Exchange rate policy is also discussed at China's annual Central Economic Work Conference, where a larger set of actors, such as provincial leaders, voice their preferences (Cheung, 1998;Liew, 2004;L. Wright, 2009).…”

“…Zhu Rongji was the lead decision maker on exchange rate policy during this period (Brahm, 2002;Liew, 2004;Moore & Yang, 2001). Zhu and his followers in the PBOC opposed devaluation because they believed it would hurt the financial sector.…”

“…22 Other insiders believe that Zhu opposed devaluation because it might lead to a bank run and threaten the solvency of the banking system (Moore & Yang, 2001, p. 218;Steinfeld, 1998;Wang, 2003). The central bankers and Zhu also worried that devaluation would increase inflation and that it would create financial instability in Hong Kong, which started to play an important role in China's financial system in 1997 (Brahm, 2002;Liew, 2004;Wang, 2003).…”

The People′s or the World′s: RMB Internationalisation in Longer Historic Perspective

“…Arguably, the thrust toward internationalization of the RMB was held back by the Asian Financial Crisis of 1997-1999, when the dangers posed by free capital flows to emerging economies became apparent. Yet, as Liew and other scholars noted, although the value of other Asian currencies was plummeting during the crisis, China sought in the main to responsibly stabilise the region rather than further devalue its currency in a bid to maintain the competitiveness of its export industries ( [51], see also [47,52]). Ultimately, the Asian Financial Crisis also called into question the desirability of individual Asian countries maintaining a US$-peg when the great bulk of their trade is intraregional in nature, as Ogawa has persuasively argued [53].…”