Your current web browser is outdated. For best viewing experience, please consider upgrading to the latest version.

Donation - Other Level

Please use the quantity box to donate any amount you wish. Sign Up to Donate

Contact

Send a question or comment using the form below. This message may be routed through support staff.

Email Article

Password Reset Request

Register


Add a topic or expert to your feed.

Following

Follow Experts & Topics

Stay on top of our work by selecting topics and experts of interest.

Experts
Topics
Project
On The Ground
ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed
ERROR
Main Error Mesage Here
More detailed message would go here to provide context for the user and how to proceed

Manhattan Institute

search
Close Nav
Share this commentary on Close

Why Trump Might Win with China

commentary

Why Trump Might Win with China

The Wall Street Journal April 18, 2017
EconomicsOther
OtherNational Security & Terrorism

Beijing may be ready to deal as it eyes slowing growth, a weakening yuan and other challenges.

In its first months, the Trump administration has pivoted on trade, backing off from threats to overhaul the North American Free Trade Agreement and reversing Mr. Trump’s campaign pledge to label China a currency manipulator. Those changes are welcome, but in an interview last week with The Wall Street Journal, the president went further, saying that he might soften his trade stance in exchange for help with “the problem in North Korea.”

Mr. Trump may be ceding too much ground. In fact, he may have more leverage over China than he thinks.

Claims that Beijing manipulates the value of the yuan never made much sense as an explanation for Chinese growth or for the persistent U.S. trade deficit with China. First, it’s impossible for monetary policy (including exchange-rate policy) to produce long-run growth or trade consequences. This principle of long-run “monetary neutrality” is one of the few tenets of economics that is nearly universally accepted.

Second, the facts show that the Chinese government has not been trying to keep its currency weak. The opposite is true. The yuan appreciated 26% from 1995 to 2014. And China’s “real exchange rate” (which captures the relative competitiveness of the prices of goods sold by China and its competitors) increased even more, 53% over the same period.

When a country’s real exchange rate appreciates....

Read the entire piece here at The Wall Street Journal

______________________

Charles W. Calomiris is the Henry Kaufman Professor of Financial Institutions at Columbia Business School, a professor at Columbia University’s School of International and Public Affairs, an adjunct fellow at the Manhattan Institute

Photo by Joe Raedle / Getty

Saved!
Close