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You could make the claim that China was devaluing its currency in 1995 but since then the Yuan has been gaining in value relative to the dollar.[1] I think tha
by Symmetry 9y ago
You could make the claim that China was devaluing its currency in 1995 but since then the Yuan has been gaining in value relative to the dollar.[1] I think that became a talking point back when it was true and people have just been repeating it ever since without reexamining.
[1]http://www.macrotrends.net/2575/us-dollar-yuan-exchange-rate-historical-chart http://www.macrotrends.net/2575/us-dollar-yuan-exchange-rate...
- dogma1138 9y agoThose aren't mutually exclusive, this isn't as bad as the "currency wars" of the mid 90's where the US wen't crying all the time to the WTO about China at least publicly. But China very much still controls the exchange rate of the Yuan to the dollar and still devalues it's currency in order to boost exports.
- Symmetry 9y agoHow can you say China is devaluing its currency to boost when the price of the currency is increasing in dollar terms? And generally speaking you can't keep exports inflated for long by currency devaluation any more than you can use inflation to keep unemployment low. In the end the trade balance will revert to what you'd expect from the savings rates of the two countries, and in this case China's higher savings rate means it exports a lot more to the US than vice versa.
- jessaustin 9y agoClearly GP means that the price would be increasing more quickly without the hypothesized devaluation. Like most economic questions, this isn't binary.