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Wed Oct 24, 2012, 09:27 AM

Krugman: An Issue (China's currency manipulation) Whose Time Has Passed

Chinese currency manipulation may come up in tonight’s debate — and as someone who wanted the US to take a tougher line back in 2010, I guess I should weigh in.

Basically, as Ezra Klein says, this is an issue whose time has passed.

In 2010 an undervalued renminbi was a significant drag on advanced economies, including the United States. Since then, however, two big things have happened: relatively high inflation in China, and some appreciation of the renminbi against the dollar. As a result, the real exchange rate of China against the United States (based on consumer prices), has appreciated significantly:

At the same time. China’s surplus has come way down:

So this is an odd time to be making confrontation over China’s currency a centerpiece of your economic policy — unless, of course, it’s just bluster aimed at making voters think you’re tough.


Once again romney is beating a dead horse. He obviously thinks there is political mileage to gain this and he may be right, but facts are not on his side.

"On day one, I will label a currency manipulator, which allows us to apply tariffs where they’re taking jobs..."

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