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Presidential Issues: Trade


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A Trump in a China shop: Trump misses the mark on Chinese currency

November 10, 2015

By Desmond Lachman

Donald Trump is not known for letting facts get in the way of a good election argument.

This is certainly true of the potshots that he is taking at Chinese exchange rate policy, potshots he bases on the erroneous premise that the Chinese currency remains between 15 and 40% undervalued. This leads Mr. Trump to policy recommendations that, if implemented, would be highly damaging to both the US and the global economies.

It seems to have escaped Mr. Trump’s notice that, while the Chinese currency might have been undervalued in 2008, this is no longer the case today. Since 2010, the US Treasury estimates that the Chinese currency has appreciated in real effective terms by around 30%. It has done so at a time when other currencies like the Japanese yen and the Euro have experienced major depreciations while the Bank of Japan and the European Central bank have engaged in money printing binges. As a result, the International Monetary Fund now considers that the Chinese currency is at approximately its fair value.

Read the full article at the American Enterprise Institute: A Trump in a China shop: Trump misses the mark on Chinese currency

Issue Categories : Donald Trump, Trade