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Currencies From Around the World

Five Facts You Need to Know About China’s Currency Manipulation

Currencies From Around the WorldOdds are that Mitt Romney’s promise to brand China a “currency manipulator” will figure heavily in tonight’s foreign policy debate. There’s good reason for that. Branding China a “currency manipulator” is popular! That’s why almost every presidential candidate promises to do it. But it also doesn’t make much sense, which is why presidents typically don’t do it.

More importantly, though, it is, at this point, an out-of-date argument. The “currency manipulator” question made a lot of sense in 2000 or 2004 or 2008. It doesn’t make much sense in 2012. But the political conversation on this issue, as so often happens, hasn’t quite caught up to the facts. It’s missing the substantial improvements China has made in recent years, and the role that other actors now play in global currency manipulation.

Here’s what you need to know:

  1. What you’re saying when you say you want to put an end to global currency manipulation is that you want a weaker dollar.
  2. China is not the world’s worst currency manipulator, or even particularly close to it.
  3. China is getting much better.
  4. Calling someone a “currency manipulator” doesn’t trigger some magical process that leads to them no longer manipulating their currency.
  5. Many experts think calling China a “currency manipulator” will backfire.

Read the original post at http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/10/22/five-facts-you-need-to-know-about-chinas-currency-manipulation/.