Readers of this blog may be interested in a new
article I
have at www.china.org.cn.
This shows that
the effects of an early increase in the exchange rate of China’s
currency, the
RMB, would be sharply different to those stated by the US
administration. In
particular it demonstrates that:
- Regardless of the view taken on the longer term consequences of an increase in the RMB’s exchange rate its immediate effect would be to increase China’s trade surplus and not decrease it;
- RMB revaluation would add to inflationary pressures internationally as well as in the US;
- As more than three quarters of China’s trade is with countries other than the US, compared to less than a quarter with the US, the consequences for the world economy of early RMB revaluation would be significantly greater than for the US.
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