China being the second largest economy in the world after US has been under pressure during last couple of years. The reason as put forward, is Chinese policy of currency devaluation for export enhancement and discouragement of the imports in the country. Chinese spectacular growth has been credited to its export orientation policy. Nevertheless, the country has ushered towards acceptance of consumption-led growth policy. Present study would examine and analyze the Chinese growth strategy from perspective of currency devaluation and export-led growth and consumption led growth. Further, the analysis would be extended in the direction of recent financial reforms, China has undertaken regarding liberalization of financial sector from state controls. This would be done by taking account of the current account balances (Surpluses), real money balances and the GDP growth during last 20 years.
In addition, analysis of Yuan devaluation policy and its impact on the oil prices would be undertaken by regressing global oil price and the nominal exchange rate of Yuan and US dollar. It may be hypothesized that the devalued Yuan leads to the rise in domestic price and thus fall in the demand for oil. OLS regression technique would be used to carry on the research study.