Le Défi Chinois
So far, discussions about whether or not China should revalue its currency have focused almost exclusively on the exchange rate’s impact on China’s trade balance. But, in evaluating China’s currency policy, the effects of any change on the trade balance are no more important than the potential consequences for inward and outward direct investment.
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NEW YORK – So far, discussions about whether or not China should revalue its currency, the renminbi, have focused almost exclusively on the impact of the currency’s exchange rate on China’s trade balance. But what would an appreciation of the renminbi do to China’s inward and outward foreign direct investment (FDI)?