China Freeing Its Markets
I have a new post up in Bloomberg today, "Obama and Romney Overstate China Threat," about how China has slowly and quietly loosened its controls on its foreign-exchange and capital markets. Here's an excerpt:
China-bashing is again in vogue, with both President Barack Obama and Mitt Romney bringing out harsh rhetoric in campaign speeches.
The candidates charge that China uses its large holdings of the dollar, other currencies and U.S. Treasury debt to manipulate exchange rates to its exclusive benefit. By undervaluing the yuan, China gives its exports a low-cost advantage in global markets.
The problem with that argument is that this year it is less and less true. As a result of reforms in Beijing, Chinese currency manipulation is more limited than at any time in the history of the People's Republic.
China's yuan is a freer currency than ever, and despite some recent backtracking, it seems likely the march to a more liberalized currency will continue. It's easy to blame Chinese currency manipulation for U.S. economic woes, but Obama and Romney's claims are increasingly looking outdated.