Author: Wang Yong, Peking University

By 15 April, the US Department of Treasury was scheduled to decide whether to label China as ‘a currency manipulator’. The prospect of a trade war, or even worse a currency war, between the world’s two largest economies has further destabilised the shaky recovery growth of the global economy. Given the extremely complicated nature of the RMB exchange rate in the global economic context, the US should undertake a rational cost-benefit analysis instead of threatening sanction.

Since July 2005, China’s RMB has appreciated by 21 per cent. But this has not significantly improved the US trade deficit, nor reduced China’s trade surplus. Read more…