Undervalued Chinese currency

Based on article from The FT, 18 January 2007

A Chinese think-tank has said that it would be wise for the Chinese government to allow a substantial appreciation in the value of the Chinese currency, the renminbi in order to make trade more balanced and improve the stability of the renminbi Yuan.

The US has before called upon China to revalue its currency many times and a realignment would slightly dampen the protectionist feelings that the US currently have towards China. It would also mean that some of the trade imbalances would be prevented from widening.

Ben Bernanke, the Chairman of the US Federal Reserve said that the undervalued currency was effectively a "subsidy" and therfore acting as a distortion to trade.

Links:
Standard economics and the 'evolution' thesis can coexist - The FT