No Time for a Trade War
The battle over China’s exchange rate is heating up again, with the US Treasury soon to assess whether China is a “currency manipulator.” But the concept itself is flawed – all governments take actions that directly or indirectly affect the exchange rate – and China's multilateral trade surplus is significantly smaller than that of Saudi Arabia or the combined total for Japan and Germany.
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NEW YORK – The battle with the United States over China’s exchange rate continues. When the Great Recession began, many worried that protectionism would rear its ugly head. True, G-20 leaders promised that they had learned the lessons of the Great Depression. But 17 of the G-20’s members introduced protectionist measures just months after the first summit in November 2008. The “Buy American” provision in the United States’ stimulus bill got the most attention. Still, protectionism was contained, partly due to the World Trade Organization.