appreciated RMB will mitigate the trade imbalance between US and China. China, for the purpose of keeping RMB exchange low, has issued large quantity of RMB, which cause inflationary pressure domestically.
The situation is quite interesting, I looked at it this way: the one who have money won't spend (China), the one who want to spend can't (US).
if we wish to keep the trade surplus (imbalanced trade), China will need to appreciate RMB to fight the inflation. or we have to live with high inflation if we keep our currency peg to US
The situation is quite interesting, I looked at it this way: the one who have money won't spend (China), the one who want to spend can't (US).
if we wish to keep the trade surplus (imbalanced trade), China will need to appreciate RMB to fight the inflation. or we have to live with high inflation if we keep our currency peg to US