The debate over the cause of China’s current-account surplus continues to develop. This column suggests a number of factors are probably to blame and one less-considered cause is input-cost distortion caused by China’s asymmetric economic liberalisation. Any debate on policy response must therefore move beyond simply discussing currency appreciation.
Yiping Huang, Friday, April 16, 2010
Fred Bergsten, Friday, April 16, 2010
C Fred Bergsten is one of several commentators calling for action against China’s exchange-rate policy. In this column, he outlines a three-part multilateral action plan to force China to allow the renminbi to appreciate: label China a “currency manipulator”, seek a special IMF consultation, and request a WTO dispute settlement panel.
Dukgeun Ahn, Friday, April 16, 2010
How might the US take action through the WTO over China’s alleged currency manipulation? This column analyses three potential legal issues: legality of exchange-rate policy under the GATT rules, legality under the subsidy rules, and the feasibility of non-violation complaints. It concludes that any WTO resolution will be difficult to achieve because the organisation is not designed to deal with alleged exchange-rate manipulation.
Charles Wyplosz, Friday, April 30, 2010
The current debate in the US over Chinese exchange-rate policy can be viewed as a rerun of the 1970s and ‘80s, with China taking Japan’s role. This column, which first appeared in the Vox's latest eBook, argues that while there is a relationship between current-account deficits and surpluses, causality is difficult to establish. Politics aside, even if China does not choose to appreciate its currency, inflation will eventually finish the job.
Jenny Corbett, Takatoshi Ito, Friday, April 30, 2010
Amongst other reasons, Chinese authorities hesitate to let the renminbi appreciate because they believe that a prime cause of Japan’s 20-year stagnation was its caving in to US demand for an appreciation of the yen. This column, which first appeared in Vox's latest eBook, argues that it was not caving to US pressure but resisting it that made Japanese monetary policy too lax and contributed to its asset bubble.
Patrick A Messerlin, Friday, April 16, 2010
If the US government does brand China as a “currency manipulator”, should the EU follow suit? This column argues that EU officials are likely to be low key on the issue. There are far too many imbalances within the EU, notably Germany’s trade deficit, so that any complaints about China are doomed to degenerate into intra-EU discord.
Shaun Breslin, Friday, April 16, 2010
The global crisis has intensified calls for Western governments to pressure China to liberalise its economy – particular its exchange-rate policy. This column argues that the power of China’s policymakers should not be overestimated – just like elsewhere, they must bow to public sentiment. An outside call for the country to change its policies might actually make the change more difficult.
Yiping Huang, Friday, March 26, 2010
Should the US follow Paul Krugman’s advice and use protectionist policies against China’s exports to encourage a revaluation of its currency? This column argues against this idea. Far from saving jobs, a revaluation of the Chinese currency might even cut global economic growth by 1.5%.
Ginger Zhe Jin, Yuyu Chen, Yang Yue, Sunday, March 7, 2010
What determines mass migration within countries? Examining data from China – the biggest internal migration experience in human history – this column finds that migrants from the same village tend to cluster at the same destination for the same occupation. This pattern is driven by social networks within villages that reduce the moving costs for future migrants, such as the risk of not finding a job.
Theodore H. Moran, Saturday, February 27, 2010
The rapid emergence of China as a major industrial power poses a complex challenge for the world’s natural resources. This column argues that the Chinese government-backed investments in natural resource supplies are predominately in areas that will help expand, diversify, and improve competition in the global supplier system. But potential geopolitical consequences remain a reason for concern.
Richard Olsen, Friday, February 19, 2010
Many economists have pointed to China’s exchange rate policy as a cause for global economic instability. This column argues that an offshore market for the renminbi will provide a dynamic and objective benchmark from which to assess the value of China’s currency and to exert pressure to float its exchange rate.
Mohamed Ariff, Friday, February 19, 2010
China’s exchange rate policy has implications for global trade and particularly other East Asian nations. This column argues that, given China’s fixation on the dollar peg, countries such as Thailand and Malaysia may have no choice but to peg their currencies to China’s yuan.
Kris James Mitchener , Se Yan , Friday, February 12, 2010
How is the global trade boom affecting wages in developing countries? Evidence from China’s first widespread experience with globalisation suggests that, under certain conditions, the skill premium can decline when developing countries open up to trade.
Arvind Subramanian, Thursday, February 11, 2010
What is the consequence of China’s exchange rate policy? This column argues that focusing on global imbalances clouds the real costs, and that China’s exchange rate regime is a mercantilist trade policy whose costs are mainly borne by other developing and emerging market countries.
Susan Ariel Aaronson, Tuesday, February 9, 2010
Is the WTO doomed? This column argues that the WTO’s credibility is waning and that to get it back it needs to reign in China’s erratic governance. China’s failure to enforce trade laws threatens the concept of mutual benefit that underpins the WTO. China is broken, and a broken China could break the WTO.
Shang-Jin Wei, Saturday, February 6, 2010
What is the connection between China’s one-child policy and its savings glut? This column provides a pioneering explanation. China’s surplus of men has produced a highly competitive marriage market, driving up China’s savings rate and, therefore, global imbalances.
Matthew E. Kahn, Siqi Zheng, Tuesday, January 19, 2010
China’s economic growth has profound environmental implications. This column estimates the household carbon emissions of China’s major cities. Even in China’s most polluting city, per household emissions are just one-fifth of those in San Diego, the greenest city in the US.
Carlo Carraro, Massimo Tavoni, Tuesday, January 5, 2010
China has promised to lower its carbon intensity by 40%–45% by the year 2020. This column says that standard estimates imply that China could meet that target simply by continuing its long-term historical trend. But China’s recent experience of a lower income elasticity of carbon intensity suggests additional efforts and leadership could be required.
Nathan Porter, TengTeng Xu, Wednesday, December 23, 2009
China’s financial liberalisation remains incomplete. The behaviour of short-term market-determined interest rates is influenced by regulated rates. This column says that China should further liberalise its retail interest rates to allow all interest rates to better reflect liquidity conditions and the scarcity of capital.
Dani Rodrik, Thursday, December 17, 2009
Policymakers blame the undervalued RMB for the global imbalances. Here one of the world’s leading development economists argues that the undervalued currency boosts China’s growth, and this, in turn, is good for the world’s recovery and the alleviation of poverty. China could maintain its growth without trade imbalances if it could introduce industrial subsidies to offset a rising yuan. It is better to subsidise tradables directly than to subsidise them indirectly through the exchange rate. This may run afoul of WTO rules, but that doesn’t diminish the economic case for the policy.