Is China Truly Adjusting Monetary Policy?

A U.S. official is reporting the China (NYSE:FXI) has committed to making changes in the way their currency is valued as a part of the recent Group of 20 summit.  The U.S. has been urging China to take a more “market-based” approach to valuing their currency the yuan (NYSE:CYB) for several years.

Though China has allowed some appreciation of the yuan, it is still largely undervalued.  Many critics feel China has used monetary valuation as a tool to give themselves an advantage in the global market. However, the country refutes the accusation and says it’s monetary policy helps the country maintain “social stability.”

While the recent G20 summit was largely focused on the European debt crisis, Chinese monetary policy was among other topics discussed.  CNN Money’s Ben Rooney wrote, “The G20 is focused on ways to rebalance the global economy by encouraging nations with large surpluses, such as China, to increase domestic consumption. At the same time, the leaders are working to strengthen economic growth in developed nations by taking steps to increase employment.”

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