Graph of the Day: Annual RMB Export Growth vs. RMB-USD Appreciation

This graph comes via the Council on Foreign Relations (hat tip James Fallows).



The Chinese were implementing a gradual revaluation before the credit crisis. They stopped revaluing their currency versus the USD in 2008. And immediately two things happened.

  1. Household spending growth plummeted
  2. Exports surged

The question for everyone is whether this is currency manipulation and, if it is, what to do about it.

  1. Attitude_Check says

    Of course it is currency manipulation. China has very strict currency controls and the RMB isn’t fully convertible. The value of the RMB is exactly what the Chinese leadership want it to be. They achieved their objective, boosting exports and minimizing domestic household spending.

    This is absolutely an example of currency war.

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