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Reduction of Global Trade Imbalances: Does China Have to Revalue Its Currency?

Author

Listed:
  • Ansgar Belke
  • Christian Dreger
  • Georg Erber

Abstract

China's growing trade surplus with the USA has triggered a discussion whether the Yuan is fundamentally undervalued in relation to the US Dollar. So far, China has resisted the demand to drastically revalue its currency. This creates tension as the US economy is only slowly recovering and unemployment rates will probably remain high for a while. In return, this increases the risk of protectionist measures by the US government, such as punitive tariffs on Chinese exports, in order to pressure China to revalue the Yuan. This would also pose a serious threat to growth opportunities in Germany.

Suggested Citation

  • Ansgar Belke & Christian Dreger & Georg Erber, 2010. "Reduction of Global Trade Imbalances: Does China Have to Revalue Its Currency?," Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 6(30), pages 223-230.
  • Handle: RePEc:diw:diwwrp:wr6-30
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.363191.de/diw_wr_2010-30.pdf
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    Citations

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    Cited by:

    1. Mirjana Gligorić, 2011. "Exchange Rate Policy, Growth, And Foreign Trade In China," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 56(190), pages 103-139, July – Se.

    More about this item

    Keywords

    US-China trade; Protectionism; Exchange rate;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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