Policy Elites in the Political Economy of China's Exchange Rate Policymaking

Abstract

This paper examines the political economy of making China's exchange rate policy, with a focus on the post-Deng reform period. First it analyses the structure of elite economic policymaking, especially on exchange rate policy, pinpointing core policymakers in that structure. Second, the paper analyses the roles and responsibilities of key economic ministries, and explains how the ministries' changing roles and responsibilities in the transforming economic environment of the reform period have affected their relative influence and the positions they pursue on exchange rate policy. Results of the analyses are then applied to explain the RMB devaluation policy in 1989 and the no-devaluation policy during the Asian financial crisis.