If China’s currency does appreciate, what impact will it have? This column argues that while Chinese exports will fall, so will Chinese imports, because China imports components from other East Asian countries that are then processed before being exported to western markets. A 10% rise in the renminbi would reduce imports of components by 6%.
Alicia García-Herrero, Tuuli Koivu, Friday, April 16, 2010
Joseph Francois, Friday, April 16, 2010
Will an appreciation of the Chinese currency create more US jobs? This column argues quite the opposite. A 10% appreciation would lead to a rise in the US price level by approximately 0.16%, meaning that in total the US would experience a mix of falling real wages and falling employment.
Andrew Small, Friday, April 16, 2010
The approaching US decision over China’s exchange-rate policy is as much about politics as economics. This column argues that the coming months will define broader Sino-US relations. The good news is that Beijing stepped back this month, avoiding an outright confrontation. The bad news is that this is only round one.
François Godement, Friday, April 16, 2010
The delayed announcement of a US decision over China’s exchange-rate policy has stoked the fire of debate over trade relations. This column argues that the efforts of China’s main trade partners – the EU as well as the US – would be better spent on ensuring a steady rebalancing of China’s economy towards greater private consumption and imports rather than simply currency revaluation.
Joseph E. Gagnon, Friday, April 30, 2010
This column argues that a 10% revaluation of the Chinese currency would likely increase US employment by at least 670,000. This is in stark contrast to recent Vox contributions by Simon Evenett and Joseph Francois claiming that an appreciation of the Chinese currency would reduce US employment by 400,000 to 600,000 jobs.
Arvind Subramanian, Friday, April 16, 2010
As the debate over China’s exchange rate intensifies, several commentators have been left despairing over the wide disparity in estimates of the extent of China’s currency undervaluation. This column argues that a new purchasing-power-parity approach provides a more consistent estimate of renminbi undervaluation at around 30%.
John R. Magnus, Timothy C. Brightbill, Friday, April 16, 2010
Does the US have a legal case for action against China’s exchange-rate policy? This column argues China’s currency regime qualifies as a subsidy in the legal sense and that the US has a legitimate case to respond within both the US and WTO legal frameworks. The high-profile difficulties are no reason to shy away from taking legal action.
Philip Levy, Friday, April 16, 2010
Many US analysts argue that China’s currency is undervalued and that its policy significantly impedes global macroeconomic rebalancing. This column outlines the possible policy responses available to the US. While multilateral policies are slower, they are less likely than unilateral policies to trigger a negative political response. But first the US needs to establish a principled basis for action.
Simon J Evenett, Friday, April 16, 2010
Today Vox posts a new eBook “The US-Sino currency dispute: New insights from economics, politics, and law” that gathers 28 short essays written by 33 authors from around the world. The eBook provides the best available economic, legal, political, and geopolitical thinking on the confrontation, as well as on the causes and likely consequences of the dispute.
Takatoshi Ito, Thursday, April 15, 2010
One objection to the calls for China to let its currency appreciate argues that the yen's appreciation during the 1980s was a cause of Japan’s “lost decade”. This column instead blames policymakers for not dealing with Japan’s property bubble early enough. China should learn from these mistakes with its own property bubble and let the renminbi appreciate.
Joel P. Trachtman, Friday, April 30, 2010
Does the US have a legal case against China’s exchange-rate regime? This column, which first appeared in Vox's latest eBook, argues that any claim against China at the WTO would face substantial hurdles, and would be unlikely to add pressure on China any time soon. If a claim does go ahead, it is more likely than not to fail.
Jeffrey Frankel, Friday, April 16, 2010
Much of the debate over China’s exchange-rate policy has focused on the effect on the US and other western economies. This column provides a comprehensive summary of China’s exchange-rate policy over the last five years and argues that it would also be in China’s interest to let its currency appreciate – and now is as good a time as any.
Claude Barfield, Friday, April 16, 2010
As the speculation over US action on China’s alleged currency manipulation intensifies, this column outlines the bills, proposals and comments that make up the political background to this debate.
Yiping Huang, Friday, April 16, 2010
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.
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.