The document discusses the history and development of the Chinese economy and currency. It provides details on: 1) The People's Bank of China was established in 1948 to manage monetary policy and regulate financial institutions. It unified China's monetary system and tightened credit controls after 1949 to aid economic recovery. 2) From 1952-1980, China prioritized industrialization, improving living standards, and narrowing income differences under communist rule. 3) Reforms from 1979 introduced price and ownership incentives for farmers, special economic zones, and gradual market liberalization to attract foreign investment and trade.

4. Contd... CHINESE ECONOMY UNDER PEOPLES BANK OF CHINA.
1949-52
Problems faced by economy due to war
 Mines and factories destroyed
 Agriculture disrupted
 Food production was 30% below
 Heavy inflations
Steps taken for recovery
 Unified the monetary system
 Tightened credit
 Restricted government budgets at all levels and put them under
central control
 45% of arable land was redistributed from landlord
 Private enterprises were brought under government control
1952-80
Communist party of china started. Their objectives were:
1) industrialization
2) Improvement of living standards
3) narrowing of income differences
4) production of modern military equipment

5. Architecture in china
Beijing opera
Chinese kungfu
China food and tea
culture

6. RELIGION
Buddhism, Taoism,
Islam, Catholicism Protestantism
LANGUAGES
Wu
Yue
Xiang
Min
Hakka
Gan
FOOD
•cuisine is heavily influenced by geography and
ethnic diversity.
•Rice is not only a major food source in China; it is also a
major element that helped grow their society, sprouts,
cabbage and scallions.
•pork or chicken — tofu is a main source of protein for
the Chinese.
THE ARTS
Many sculptures and paintings depict
spiritual figures of Buddhism
The largest festival — also called the Spring Festival — marks the
beginning of the Lunar New Year. It falls between mid-January and
mid-February and is a time to honor ancestors. During the 15-day
celebration, the Chinese do something every day to welcome the
new year, such as eat rice congee and mustard greens to cleanse
the body. The holiday is marked with fireworks and parades
featuring dancers dressed as dragons.

7. Economy overview 2017
•Rapid economic and social
development.
•GDP growth has averaged nearly
10% a year.
•With a population of 1.3 billion
standing second largest economy.
•Played influential role in
development and in the global
economy since global financial
reserve of 2008.
•Due to economic ascendance china
also faces some problems like:
•High inequality
•Rapid urbanization
•Environmental sustainability
•External imbalances
•Demographic pressures
•Internal migration of
labour.

8. INTRODUCTION TO CHINA'S
ECONOMIC REFORMS
 Beginning in 1979 china launched several economic reforms
 Price and ownership incentives for farmers
 Established four SEZ's for:
 a) attracting foreign investment
 b) boosting exports
 c) importing high technology products.
 Additional reforms:
 decentralized economic policy making
 Free market
 Tax and trade incentives to attract foreign investment
 State price controls eliminated
 Trade liberalization, removal of trade barriers
China's gradual implementation of economic reforms sought to
identify which policies produced favorable economic outcomes.

9. ECONOMIC REFORMS 2017
 Shift from command
economy to a mixed
economy
 Move from government spending,
state run companies and low cost
exports towards private investment,
entrepreneurial innovation and
domestic consumption
 Lower taxes and
lower interest
rates
 Loosen price controls
on water, electricity,
and natural resources
 Small
organizations can
consolidate and
become larger and
it must earn profit
 Aiming yuan to replace
the US dollar as world
reserve currency

10. Challenges faced by Chinese economy
Slowdown in economic growth
Increased bankruptcy
Rise in pressure on employment
Long term inflation
Shift from external demand to domestic
demand
Investment driven growth to consumer led
growth
Shift from government investment to private
investment
Traditional elements of production to advanced
elements of production
Maintain the pace of economic growth
Upgrade technology, management and employ
more skilled personnel
Conserve natural resources

11. People bank of china
 Power to carry out monetary
policy and regulate financial
institutions in mainland china
 Established on December 1,
1948
 Headquarters was first located
in Shijiazhuang Hebei and then
moved to Beijing in 1949.
Governor : Zhou Xiaochuan
Currency: Renminbi (RMB) CNY (ISO 4217)
Reserves: US$3.201 trillion
Bank rate: 6.0%
Interest on reserves: 3.5%
Foreign Exchange Reserves: US$ 3.109
Trillion as on sept 2017
RRR: 17% as on sept 2017

12. ECONOMIC
FUNCTION
CHINAS
PRESENT
STATUSl
MAJOUR
TRADING
PATNERS

52. HISTORY OF CHINESE CURRENCIES
 In ancient china coins were the any forms of currencies
 These coins can be made of copper, iron, lead, gold and
silver with different shapes, weight and marks.
TYPES
Shell Money:
 primitive money
 Commodity money
 Unit: peng (means two clusters of shells)
 one peng is made up by two clusters of 10 shells.
 The invention of shell money which made of copper at the end of the Shang
Dynasty (1675 BC–1029 AD) marks the beginning of the use of metal coins in China.
Copper cash:
 made of copper which turned up in the Qin Dynasty (221 BC–206 BC)
 distinguished by the letters marked on the coins referring to the region title in
different dynasties.
Jiao Zi - the Earliest Paper Currency in the World:
 appeared in the early North Song Dynasty
 This paper currency was a piece of paper printed with houses, trees, men and
cipher.

53. EVOLUTION OF
CHINESE CURRENCY
 Translated as "the people's currency" the renminbi (RMB) has been the currency of China for
over 50 years. It is also known as the Chinese yuan (CNY) and by the symbol '¥'.
THE RENMINBI'S BEGINNINGS
first issued on December 1, 1948, by the Chinese Communist Party's People's Bank of China.
At that time, the CCP was deep into the civil war with the Chinese Nationalist Party, which had
its own currency, and the first issuance of the renminbi was used to stabilize Communist-held
areas which assisted in a CCP victory.
After the defeat of the Nationalists in 1949, China's new government addressed the extreme
inflation that plagued the old regime by streamlining its financial system and centralizing foreign
exchange management.

54. Contd.....
1. In 1955, the People's Bank of China, issued its second series of the renminbi that
replaced the first at a rate of one new RMB to 10,000 old RMB.
2. A third series of RMB was issued in 1962 which used multi-color printing technology
and used hand-engraved printing plates for the first time.
3. In this period, the RMB's exchange value was unrealistically set with many western
currencies which created a large underground market for foreign exchange
transactions.
4. In 1987, a fourth series of RMB was issued featuring a watermark, magnetic ink, and
fluorescent ink.
5. In 1999, a fifth series of RMB was issued, featuring Mao Zedong on all notes.
UNPEGGING THE RENMINBI
1.From 1997 to 2005, the Chinese government pegged the RMB to the United States
currency at about 8.3 RMB per dollar.
2.On July 21, 2005, the People's Bank of China announced that it would lift the peg to
the dollar and phase in a flexible mechanism of exchange rates. Following the
announcement, the RMB was reevaluated to 8.1 RMB per dollar.

55. China Gold Reserves
• A gold reserve was the gold held by a national central bank, intended mainly as
a guarantee to redeem promises to pay depositors, note holders or trading peers,
during the eras of the gold standard, and also as a store of value, or to support
the value of the national currency.
• Remained unchanged at 1842.56 Tonnes in the second quarter of 2017

56. HONG KONGSWISS UKAUSTRALIA

57.  An exchange-rate regime is the way an authority manages
its currency in relation to other currencies and the
foreign exchange market.
 It is closely related to monetary policy It was a purely fixed regime
from 1994 to 2005, when the yuan was pegged to the U.S. dollar at
approximately 8.28 yuan to the dollar.
 On July 21st 2005, China slightly revalued the yuan and officially
modified the exchange rate system from 8.27 to 8.11 per US dollar.
 From July 2005 to February 2010, the yuan appreciated 17.5 percent
against the U.S. dollar under a pure flexible exchange rate regime.
 China's current exchange rate regime is a hybrid of fixed and
floating.

58. Contd.....
HOW CHINA MAINTAINS THE UNDERVALUED YUAN
1. China actively devalues its currency by putting
appreciative market pressures on the dollar
2. swapping out dollars in its economy for yuan.
3. This decreases demand for the yuan, thereby lowering its
value relative to the dollar.
4. Dollars are then used to purchase U.S. government assets
in order to earn interest on the foreign reserves
5. China ensures that it soaks up nearly all of the foreign
currency within its economy via strict capital controls
6. capital control is the requirement of almost all Chinese
businesses to relinquish any foreign currency in
their possession to the state-owned banks and accept
yuan in return

59. MONETARY POLICY OF CHINA
•It aims to keep the value of the RMB stable and contribute
to economic growth.
•It achieves its policy goals with reference to inflation control and
employment expansion
•And setting differential interest rates and demanding stranded
asset write offs in response to policy changes by the central government
of China.
Money supply
Is the total amount of money in circulation or in existence in a country at a given
time
It impacts the price levels, capital availability, inflation, and the overall business and
economic cycle of a country.
High money supply leads to more spending power and lower interest rates, which
makes more capital available for investments, businesses and spending.

61. Challenges faced by people bank of china on money
supply
A weakening yaun and a shrinking money supply are the key factors
causing China's economic challenges
Overreliance on Investment
debt and investment fueled China's expanding economy.
Tampering with the country’s interest rate could harm the economy further.
China's budget deficit is expected to expand
Property investment has remained relatively low, which has affected overall
growth.
Deflation: China actively devalues its currency by putting appreciative
market pressures on the dollar
• swapping out dollars in its economy for yuan.
• This decreases demand for the yuan, thereby lowering its value relative to
the dollar.
But this may cause reduction in GDP, national income and per capita
income

62. High Capital Outflows
 Overexposure to the U.S.
dollar has contributed to high
capital outflows in China.
 Capital outflow difficulties
have occurred partially due to
competition between banks on
deposit rates.
 The greatest risks companies
face are a slowing domestic
economy, increasing
competition, and rising
operation and labor costs
High Rate of Corporate Loan Default
• A strengthening U.S. dollar causes
loan payments to go up for
Chinese companies that have
loans in U.S. currency.
• High leverage has contributed to
the defaulted loan issues
• rising costs, falling demand from
key markets and slowing domestic
consumption
• the government plans to cut taxes
to reduce company liabilities.
Contd.....

64.  Due to Global financial crisis in the year 2008, China realized the dependency
on the US Dollar and the weakness of the international monetary system.
 It accelerated in 2009 when China established dim sum bond market and
expanded the Cross-Border Trade RMB Settlement Pilot Project, which helps
establish pools of offshore RMB liquidity.
 In November 2010, Russia began using the Chinese renminbi in its bilateral
trade with China followed by Japan, Australia, Singapore, the UK and Canada
 As a result of the rapid internationalization of the renminbi, it became the
eighth-most-traded currency in the world in 2013 and included in IMF Reserve
in the year 2016 with 10.92% weighting, topping yen and pound is a milestone

65. Inflation China - consumer price index (CPI)
Inflation measured by consumer price index (CPI) is
defined as the change in the prices of a basket of
goods and services that are typically purchased by
specific groups of households.
Inflation is measured in terms of the annual growth
rate

79. Chile
Costa
Rica
Georgia

87. References
http://www.ducksters.com/history/china/ancient_china.p
hp
https://en.wikipedia.org/wiki/History_
of_China
https://www.youtube.com/watch?v=D2jmu
jSBPJA

88. Continue……….

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