The US treasury department released its semi-annual report on international economic and exchange rate policies last Friday. As usual, the main interest centred on the treasury’s comments about China’s exchange rate policies, which are the subject of contention in the US Presidential race. Mitt Romney says his first act on taking office will be to label China as a “currency manipulator”, which no-one has done since the Clinton years.
While the debate in US politics is far from over, the economic case for labelling China as a currency manipulator has weakened recently. The mix of China’s foreign exchange and domestic economic policies has improved markedly in the past couple of years, a development which will rebound to the benefit not only of China, but the rest of the global economy as well. Read more