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ID: 094664

Anomaly in China's dollar-RMB forward market / Wang, Yi David

Wang, Yi David	Journal Article
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Publication

2010.

Summary/Abstract

Newly-established data on onshore deliverable US dollar-RMB forwards and the Shanghai Interbank Offered Rate from October 2006 to April 2009 reveal significant violations of covered interest rate parity. This paper explains the cause of this anomaly. Deviations in the forward market are caused by an increase in US dollar-to-RMB conversion restrictions. Given that Chinese monetary authorities want to prevent market participants from taking advantage of the predictable appreciation of the RMB, China's State Administration of Foreign Exchange has to tighten up the control on US dollar-to-RMB conversions. Under the tightened conversion restrictions, similar deviations will resurface in the forward market whenever hot money inflow increases. One way to avoid covered interest rate parity violations in the forward market is to decrease hot money inflow into China by maintaining a stable and credible exchange rate policy.

Key Words

China ; Foreign exchange ; Dollar ; Covered Interest Rate Parity ; Deliverable Forward

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ID: 119805

Factors influencing the technology upgrading and catch-up of Ch: technology acquisition mechanisms and government policies / Qiu, Yueming; Ortolano, Leonard; Wang, Yi David

Ortolano, Leonard	Journal Article
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Publication

2013.

Summary/Abstract

This paper uses firm level data for the Chinese wind turbine manufacturing industry from 1998 to 2009 to quantify the effects of technology acquisition mechanisms - purchasing production licenses from foreign manufacturers, joint design with foreign design firms, joint-ventures and domestic R&D - on wind turbine manufacturers' technology levels (as measured by turbine size, in megawatts). It also examines the impacts of government policies on manufacturer technology levels. Technology upgrading (measured by increase of turbine size) and catch-up (measured by decrease in the distance to the world technology frontier in terms of turbine size) are used to measure advances in technology level. Results from econometric modeling studies indicate that firms' technology acquisition mechanisms and degree of business diversification are statistically significant factors in influencing technology upgrading. Similar results were found for the catch-up variable (i.e., distance to the world technology frontier). The influence of government policies is significant for technology upgrading but not catch-up. These and other modeling results are shown to have implications for both policymakers and wind turbine manufacturers.

Key Words

Government Policies ; Chinese Wind Turbine Manufacturer ; Technology Acquisition Mechanisms

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