RMB and Sino-U.S. trade imbalance

• Main Author: Tai, Yue Hong
• Other Authors: Friedrich Wun-Yuen Wu
• Format: Theses and Dissertations
• Language: English
• Published: 2010
• Subjects: DRNTU::Social sciences::Economic development::United States; DRNTU::Social sciences::Economic development::China
• Online Access: http://hdl.handle.net/10356/38893
• Institution: Nanyang Technological University

In the past years, RMB issue has gotten much attention from international community, especially from U.S, whose deficit with China has increased by almost triplication from 83.8 billion USD in 2000 to 232.5 billion USD in 2006 through U.S. official data. RMB is blamed to be the primary reason for U.S. huge deficit. Many bills were introduced in 109th and 110th Congress to address China's currency policy and required to apply U.S. countervailing laws or raise tariff against China's exports. One of the main themes in China-U.S. Strategic Economic Dialogue is to resolve RMB issue. This essay assesses the effects of undervalued RMB on U.S. economy and the reasons causing U.S. current account deficit. It is concluded that while the RMB is actually undervalued at a large margin, but it is not the primary reason for U.S. trade deficit with China. There are also other global, regional and domestic (both Chinese and American) factors in play.