The world’s largest trade fair – China’s exports rebound

China’s current account has taken a big hit during the recession with exports falling by as much as 25% from the previous year. Things are looking up however at the world’s biggest trade show in Guangzhou China where the signs are good that trade is finally rebounding. The interesting point to take from the article is how China’s government has helped increase exports, which could be really useful for revision on how to improve the state of a country’s current account. The government has actively kept their currency weak and provided firms with tax rebates to ensure companies maintain their price competitiveness. Click read more for some questions to go with the article.

Explain has a weakened currency will help increase China’s exports. (3 marks)

‘Imposing tariffs on foreign goods is the best way to reduce a current account deficit.’ Do you agree with this statement? Give reasons for your answer (8 marks)