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Unformatted text preview: Op-edA Modest Proposal for China's Renminbiby Morris Goldstein, Peterson Instituteand Nicholas R. Lardy, Peterson InstituteOp-ed from the Financial TimesAugust 26, 2003 © Financial TimesThe current debate on the renminbi exchange rate is appropriate given China's role as a leading economic and trading power. But the debate has become so politicised that crucial facts are being ignored and dubious arguments are replacing sound analysis. A medium-size revaluation of the currency may not be as "sexy" as a large revaluation or no revaluation but it rests on a firmer foundation and is more consistent with China's long-term interest.Those arguing for a large revaluation of the renminbi—35 per cent or more—sometimes confuse bilateral trade balances with overall current account balances. While China is running a large (Dollars 100bn in 2002) bilateral trade surplus with the US, its trade balance with the rest of the world is in deficit, at Dollars 75bn (Pounds 47bn). Bilateral trade balances are especially misleading in this case because China processes goods previously exported to industrial countries by other emerging Asian economies....
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This note was uploaded on 09/25/2010 for the course ECO IntEco taught by Professor Andre during the Spring '06 term at UFRGS.
- Spring '06
- International Economics