https://www.reuters.com/world/china/how-pboc-might-respond-chinas-weakening-yuan-2022-05-11/
The Yuan, which is the name of the currency that China uses, has fallen 5% in value in China. The last three weeks speculation has been raised over when and how the People’s Bank of China (PBOC) might act to slow its depreciation. The main factors for this depreciation are the interest rates in the United States going up, and the war in Ukraine, and finally the economic lockdown Covid has caused. While most market participants expect the yuan’s weakness to persist for the time being, some expect the central bank to at least slow the pace of its decline.
The Yuan depreciation that has been seen since the following events have taken place is extremely abnormal for China’s very robust economy. China has not seen a dip in their value since they have become a stronger world power throughout the years. China has also obviously been hit by the Covid-19 outbreak, harder than any country in the world. This shows in the pure number of infected almost doubling every other country. Therefore, the economy has taken a hit from the less number of workers that Covid has caused. The Ukrainian event has also caused economic downfall because Russia, being a titan in trade, has been pushed out of the market making economies in different countries become worse. Finally the United States rise in interest rate causes the Chinese economy to dwindle because of how much interest is being paid to the United States.
This relates to class because it shows for the first time in a while that one of the powers fighting to be a bipolar power finally takes a hit. The United States is currently a unipolar power but it becomes more and more obvious that China is slowly becoming a powerful contender throughout the years. If China becomes more affected by these events they may have a smaller chance of being a bi-polar country.
