The Wall Street Journal says the U.S. is “wrong” to protest China’s “fixed yuan-dollar rate.” Their explanation is that many countries adopt a fixed rate, so as to ensure market stability. China is no different…
Actually, that’s not true. If it were correct that most countries maintain a strict dollar peg, there would be no need for daily exchange rate billboards at airport currency stands. Each day would mean the same exact number of francs for dollars, or lire for dollars, etc.
The real issue isn’t just that China has a FIXED exchange rate, but that its currency is so deliberately UNDERVALUED. That’s what has proven so problematic for the rest of the world.
Unfortunately, the Journal opposes any revaluation of the Yuan because it “could damage China’s growth.” No mention, of course, of the damage it is doing to American manufacturers and their workers.