China Revaluation

John Rutledge

China Revaluation Will Lower Chinese Wages, Prices.
You may have noticed by now that there is a sharp difference in opinion among economists about the impact of yesterday's yuan revaluation on the US and China. My point is that by forcing China to stop buying Treasuries we are also likely tightening Chinese monetary policy, which will ultimately push Chinese wages and prices even lower. Not an American dream scenario. A lot of economists will see this differently. They will see a drop in the dollar against the yuan as reducing US export prices in China and increasing Chinese import prices here which, over time, would reduce imports and increase exports, raising GDP. What's the difference in the thinking?

full