Ryan Avent continues to find new ways to lose the debate with Paul Krugman, making two questionable arguments -- first, that if China revalues its exchange rate, it would be "good" for China, and, secondly, that America should just let China have its way with us.
While a slight appreciation of the Renminbi might be positive for China, as it would reduce inflation and take off the international pressure, a large revaluation, or free float, would mean an end to "that giant sucking sound" which is the relocation of manufacturing to China would slow dramatically or stop, a relocation which speeds the development of China as an artificially high number of Chinese workers are pulled out of agriculture and get manufacturing experience at the cost of a low Renminbi. On the other hand, the large foreign currency reserves of the government mean that China won't have an Asian Financial crisis.
And, I'm at a complete loss for why economists such as Ryan Avent or Greg Mankiw think that tariffs are the worst thing in the world and should be fought at ever turn, but that an artificially undervalued exchange rate is A-OK. Thing is, both have roughly the same implications for trade.
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