In principle, a stronger yuan would help by making exports less profitable and by giving consumers more spending power.
The basic economic analysis that a stronger yuan, on a trade-weighted basis, is necessary to rebalance China's economy away from exports is surely right.
In particular, a stronger yuan would not significantly reduce America's trade deficit.
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Would a stronger yuan really save America's papermakers and other struggling firms?
Foreigners argue that a stronger yuan would not only help reduce global imbalances, such as America's trade deficit, but would also benefit China.
ECONOMIST: Why China resists foreign demands to revalue its currency
Nevertheless, in the long run, a stronger yuan would benefit China's economy and the world's by helping shift growth from investment and exports towards consumption.
ECONOMIST: Why China resists foreign demands to revalue its currency
Since America no longer makes most of the products it imports from China, a stronger yuan would initially act more like a tax on consumers.
And, yes, a stronger yuan would also speed up global rebalancing.
That would put the global recovery on a steadier footing, especially if a stronger yuan were mirrored by appreciation of the currencies of other Asian emerging economies.
Yet, while central banks in Europe and politicians in Washington ask for a stronger yuan, the market consensus is that China is doing what it said it would do.
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Because while a stronger yuan increases the dollar price of Chinese goods, it also lowers the yuan price of foreign raw material, allowing Chinese manufacturers to keep a lid on the price of their finished goods.
Because the value of imported inputs accounts for about half of the value of Chinese exports, a stronger Yuan reduces the prices of imported inputs used to manufacture and assemble products in China for export to the United States and elsewhere.
Better to squelch the speculators by choosing a substantially stronger yuan early on.
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The government is allowing offshore markets to trade the yuan at a level much stronger than what the Central Bank sets it at.
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He said they lobby for a stronger yen but say little about the weak Chinese yuan because it benefits their heavy investments in China.
The Chinese yuan will likely end the year a little over 5% stronger than it did last year, Barclays analysts said late Thursday.
One reason the strengthening of the yuan will play into the hands of the Chinese consumer is that a stronger exchange rate cheapens import prices, giving consumers greater purchasing power.
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