Download Call for China to Remove Peg on Yuan Currency (Greece)

Committee: Economic & Finance
Topic: Call for China to Remove Peg on Yuan Currency
Sponsor: Greece
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Calling on the fact that China has set a peg for the Yuan currency, so that $1 USD = 6.8 Yuan.
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Noting that this peg effectively eliminates appreciation or depreciation of the Yuan.
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Pointing out that this strategy has impacted the world trade balance. A weak Yuan causes Chinese
products to become less expensive in other countries, while products imported to China become more
expensive, thus increasing China’s trade surplus.
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According to commonly accepted Free Market Economics and Foreign Exchange (FOREX)
principles, this peg would be considered a manipulation of currency. If the USD were to fall 2%, so
would the Yuan. This worsens trade deficits in other countries that import products from China, and
may hinder recovery from this global recession/depression.
10 Calling on the UN to force China to remove this currency peg, and restore fair Free Market
11 Economics and FOREX trading of the Yuan. From the date of the adoption of this resolution, China
12 would have 60 days to remove this currency peg, or face trade sanctions from UN member nations.
13 Noting that while removal of this peg may decrease China’s trade surplus, that surplus for 2008 was
14 approximately $290 billion USD, and an estimated $200 billion USD for 2009. With China’s GDP
15 estimated at 6-9% for 2009, the resulting decrease in trade surplus would not be devastating to the
16 Chinese economy, but would be beneficial to the world economy.
18 Also noting that, while other countries can set pegs on their own currencies to counter the Yuan peg,
19 this would create a currency war that would destabilize currencies around the world. If the UN were
20 to force China to remove the peg, this destabilization of currencies could be avoided.
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Concluding that this removal of the Chinese peg of the Yuan currency would be extremely
beneficial to the global economy.