The Economist recently examined the present state of China’s undervalued currency, and the nation’s plans to increase yuan appreciation:

"China’s currency has long been undervalued, and this undervaluation has long been a sore spot for China's trading partners. American officials, in particular, have been upset by the impact of a cheap yuan on America's trade balance with China, and by the impact of that imbalance on employment. China allowed its currency to appreciate nearly 20% against the dollar from 2005 to 2008, but it halted the rise in 2008 out of concern for the impact of the global downturn on its export-oriented economy. Last year, as it was clear that China's economy was once more running at full steam (and then some) appreciation resumed."

Recent statements from Chinese policymakers suggest that they recognize the need for continued yuan appreciation, and that future fiscal plans will likely incorporate these currency adjustments:

“[These discussions] suggests that appreciation will continue, and perhaps accelerate, as China responds to its overheating economy. And that is potentially a very good thing for both China and America.”

We agree, and have long been urging Congress to take action on Chinese currency manipulation that has increased the U.S. trade deficit while costing American workers their jobs.

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