02-25-2016, 09:45 PM
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Trump fudges the facts on China the way Cruz fudges the facts on climate change.
EconoMonitor : Ed Dolan's Econ Blog » ?Truth Teller? Donald Trump Fudges the Facts about Chinese Currency Manipulation
Quote:
Yes, China is a “currency manipulator” in the narrowly technical sense that it uses monetary policy to influence its exchange rate. According to the IMF, so do more than half of the other countries in the world—friendly countries both rich and poor like Switzerland, Bulgaria, Costa Rica, Kenya and dozens of others. Having a fixed exchange rate, or one that is allowed to float only within a managed range, is entirely consistent with the agreed rules of international trade.
When politicians call China a currency manipulator, though, they have something else in mind. They claim that China consistently holds the yuan so far below its fair market value that even the best managed American companies could not compete if they tried.
A few years ago, in the immediate aftermath of the global economic crisis, that charge did have a degree of credibility. China had abandoned its previous policy of allowing its currency to appreciate gradually against the dollar and returned to a fixed exchange rate. By early 2010, US economists were estimating that the yuan was 20 to 40 percent undervalued—a margin wide enough to have a significant effect on the competitiveness of US exports.
However, Trump and others who still make the charge of currency manipulation have not been watching the numbers over the past five years—or if they have, they are hoping their listeners have not. Since June 2010, the yuan has once again been steadily gaining in value.
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