From Far Eastern Economic Review:
From the vantage point of 1998, or even 2002, it would have been impossible to foresee the degree of global attention the lowly-valued Chinese yuan generates today. Over the past few years, U.S. taxpayers have paid millions of dollars to finance a seemingly endless series of hearings on the mainland exchange rate, while lawmakers have introduced bill after bill to promote the adjustment of a system most people only vaguely comprehend (and a currency most have never held in their hands). Pundits routinely talk about over- and undervaluation as if they were the simplest concepts in the world, although at a higher level this issue has confounded and divided a host of trained economists. Across the Pacific, Chinese policy makers have been tearing their hair out trying to decide what to do with their currency”and here as well, most senior leaders on the mainland have only a rudimentary understanding of the principles involved. [Full Text]
Jonathan Anderson is chief Asian economist at UBS.
