China’s Daring Depreciation
While China's central bank devalued the renminbi earlier this month, many foreign commentators, viewing the move as a blatant attempt to boost Chinese exports, warned that a new round of currency wars was coming. But there are good reasons to believe that the move was not intended to boost trade competitiveness.
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BEIJING – On August 11, the People’s Bank of China (PBOC) lowered the central parity rate of the renminbi by 1.9%, sending shockwaves around the globe. Many foreign commentators condemned the devaluation as a blatant attempt to boost Chinese exports – a move that would, they warned, spark a new round of currency wars. But there are good reasons to believe that this was not China’s motivation at all.