posted on 2025-05-08, 16:48authored byJames Xiaohe Zhang, Weiwei Ying
Based on a simple two sector theoretical framework, this paper examines the relationship between RMB appreciation, economic growth and income distribution in China through running simulations on an applied general equilibrium model (the GTAP model). Specifically, it discovers that a drastic appreciation of the RMB is harmful to the Chinese economy for its adverse impact on production, international trade and income distribution. While the miraculous economic growth which has been maintained for three decades in China could be seriously disrupted, the pattern of income distribution may also deteriorate.