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A Chinese think tank has come out with an essay that argues against pressure to increase the trading value of the Yuan. The general argument–a bit self serving–is that an increase in the exchange rate will hurt China’s growth and hinder the recovery of the global economy.

The essay also asserted that lifting the value of the yuan would not help narrow China’s trade surplus with the United States, as the Obama administration has claimed it would.

China’s cheap goods have helped foreign consumers facing hard times, and raising the value of the yuan could hinder global economic recovery, said the think-tank.

The last argument is the one that makes sense to me. Paying less for imported goods–especially when demand is inelastic–means consumers will have extra income left over for the purchase of other goods. Yes, that would help foster global recovery.

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One Comment

  1. A strong yuan is just another conspiracy of ‘the defender of democracy and free will’.


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