China Financial Daily

RMB appreciation: Appreciation of the RMB will not solve the imbalance trade of Europe and the United States
According to “China Securities News” reported that the recent speculation in the Western countries began to revaluation of the RMB, including Nobel Laureate Paul Krugman and other Western experts and scholars and even some of the RMB appreciation and tied to international trade imbalances. These people point of view is that China’s undervalued because of the RMB exchange rate in foreign trade in order to gain undue competitive advantage in the United States and other countries exacerbated the trade deficit with China, and only let the yuan rise sharply in order to solve Sino-foreign economic and trade imbalances.

Comments: The global trade imbalances blamed yuan undervalued issues, it is forcing the yuan to appreciate the best of Western rhetoric. But in fact, this argument is untenable. Not long ago, the International Monetary Fund chief economist Olivier Blanchard, an interview with Reuters, said, according to IM F estimates, even if the yuan and other Asian major currencies by 20% can only help the United States and exports the equivalent of the gross domestic product 1% growth. In fact, the United States and other Western countries, a large number of trade deficit is the result of imbalances in the global industrial distribution, recalling the past few decades of global industrial restructuring, the shift of manufacturing from developed to developing countries, large capacity, big financial services such as virtual economy sector, led to the hollowing out of manufacturing industry. Even if China’s export decline, the United States and other Western countries, the trade deficit will not significantly improved, because other big manufacturing Congress was quick to fill the gap left by China. Europe and the United States for appreciation of the intention is simply to restrict China’s development.

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