From VoxEU.org:
The Chinese renminbi (RMB) has come under intense scrutiny in the last five years, and calls for its revaluation have found receptive audiences amongst economists, politicians and the popular press. Many have advocated that China move to a more flexible exchange rate in order to alleviate global imbalances and improve its own macroeconomic management. But the benefits of an exchange-rate regime change for China and for the world may have been over-sold in policy circles. I say so on two grounds. First, the role of a flexible exchange-rate regime in facilitating current account adjustment may be vastly exaggerated. Second, the virtue of a flexible RMB exchange-rate regime in enhancing the effectiveness of China’s macroeconomic stability may also be over-rated. [Full Text]
Shang-Jin Wei (魏尚进) is Assistant Director and Chief of Trade and Investment Division at the International Monetary Fund.
