Strong Yuan in China’s Interest

The U.S. has pressured China for some time to allow its currency, the yuan, to appreciate. China, in our assessment, will not allow the yuan to appreciate at the request of U.S. policy makers, but rather when China deems it to be in its own national interest. Indeed, we believe this time has come. Domestic demand Much is said about encouraging domestic demand in China to achieve a less export dependent economy. The U.S. and China, however, have a different understanding of what stimulating domestic demand means; we propose a third strategy: It appears to us that U.S. policy …