China’s monetary and exchange rate policy and the global economy

US Secretary of State Hillary Clinton speaks as Chinese Vice Premier Wang Qishan (R) looks on during a joint statement at the Eisenhower Executive Office Building in Washington at the end of the US-China Strategic and Economic Dialogue. (Photo: AAP)

Author: Brian Scarfe, University of Victoria

China has had an inappropriate monetary and exchange rate policy for far too long.

By keeping its currency value closely in line with the US dollar, China maintains a grossly under-valued exchange rate. The result is China’s immense current account surpluses and associated massive accumulation of foreign exchange reserves. Read more…