Gordon Hanson's Research On Chinese Imports Featured in Center for American Progress Article
China’s Currency Problem Isn’t the Only Problem
10/07/2011
Adam Hersh,
Center for American Progress
Legislation to pressure China on its undervalued exchange rate is wending its way through the Senate this week. Addressing China’s undervalued currency would be a good thing: China’s exchange rate policies are partially to blame for the United States’ growing trade deficit, erosion of jobs providing middle-class livelihoods, and international financial imbalances that threaten to destabilize the world economy—and China’s economy, too. Policymakers should not pretend, however, that tackling the exchange rate issue will be a panacea for our economic growth, jobs, and competitiveness challenges.
China’s undervalued exchange rate policy in effect subsidizes its exports, while at the same time making exports from the United States that much more expensive in terms of China’s money, the renminbi (sometimes referred to as yuan). But China’s economic modernization and transformation from an inefficient agricultural producer to a nimble, technologically advancing, and globally competitive manufacturing economy rests on a much broader foundation of national economic strategy than just its exchange rate management.
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Gordon Hanson is director of the Center on Emerging and Pacific Economies and professor of economics at UC San Diego, where he holds faculty positions in the School of International Relations and Pacific Studies and the Department of Economics. He is a research associate at the National Bureau of Economic Research, a member of the Council on Foreign Relations, and a co-editor of the Review of Economics and Statistics. Prior to joining UCSD in 2001, he was on the economics faculty at the University of Michigan (1998-2001) and at the University of Texas (1992-1998).
