China's yuan is pegged to political pressure. So why not apply pressure?

Posted by scapozzola on 10/22/2012

China's continued currency undervaluation has become a hot topic in the presidential campaign.  So it's important to recognize that Beijing has repeatedly made politically timed fluctuations to its currency, the yuan. 

Such moves are always perfectly timed, giving Beijing room to say that it is making progress and thus fend off critics.  Unfortunately, nothing of consequence actually gets accomplished.

With President Obama and Governor Romney finally talking about China's predatory trade practices, the lesson is this: pressure, aggressively applied, is the ONLY thing that gets China to adjust its currency. Both Romney and Obama should keep it up, not back down.

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