Currency Risk Exposure of Chinese Corporations

Despite the growing international importance of Chinese economy, the currency risk of Chinese firms has received little attention. This paper documents Chinese exporters are exposed to significant currency risk to ASEAN countries and firms in three industries are adversely affected when Yuan appreciates (as in 2005-06). Yuan appreciation also impacts exporters to India, Australia and Russia in certain industries. Interestingly, Chinese exporters have insignificant currency risk associated with China's top trading partners: EU, US, Japan and Hong Kong. Overall, the magnitudes of the currency risk coefficients for Chinese companies (<10%) are smaller than those previously documented for other countries (20%-40%)