China has an estimated 2.4 trillion in foreign reserves and recently, there have been accusations from American politicians and in the Western media, that China has been manipulating the exchange rate and costing Americans their jobs.
In a report on Vox (Research-based policy and commentary from leading economists), Zheng Song, Kjetil Storesletten and Fabrizio Zilibotti claim they can prove that China did not gain this huge trade surplus from manipulation of the exchange rate.
Chinese Currency
Instead, they will offer proof from similar economic growth in South Korea and Taiwan that both resulted in large surpluses from trade.
The three economists wrote that in the second half of the 1980s, South Korea saw booming growth and a series of large current account surpluses. In addition, Taiwan experienced large trade surpluses in the 1980s. Since both South Korea and Taiwan are smaller than China, their trade surpluses did not draw as much attention as China’s trade surplus has.
The authors of the study concluded that the call for trade sanctions against China might be unwarranted as well as dangerous.
Read more about America’s Assault on China’s Currency.
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Lloyd Lofthouse is the award-winning author of the concubine saga, My Splendid Concubine & Our Hart. When you love a Chinese woman, you marry her family and culture too.
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Posted by Lloyd Lofthouse 
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