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Is the renminbi undervalued?


  • Jan Lemmen



A debate has raged whether and to what extent the renminbi has been undervalued. To answer this question this memorandum is first interested in the level of China’s “equilibrium” (real effective) exchange rate. Secondly, this memorandum is interested in the methodology to determine the equilibrium exchange rate. A survey of the literature concludes toward a renminbi undervaluation of about 25% in real effective terms. This undervaluation is not expected to disappear any time soon.

Suggested Citation

  • Jan Lemmen, 2006. "Is the renminbi undervalued?," CPB Memorandum 166, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:memodm:166

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    References listed on IDEAS

    1. Maurice Obstfeld & Kenneth Rogoff, 2007. "The Unsustainable U.S. Current Account Position Revisited," NBER Chapters,in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 339-376 National Bureau of Economic Research, Inc.
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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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