There is an ongoing debate between the United States and China regarding whether the Chinese yuan’s value should be revalued upward. The cost of labor in China is substantially lower than that in the United States. Would the U.S. balance-of-trade deficit in China be eliminated if the yuan was revalued upward by 20 percent? Or by 40 percent? Or by 80 percent?

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Chapter19: International Finance And The Foreign Exchange Market
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China–U.S. Balance of Trade

There is an ongoing debate between the United States and China regarding whether the Chinese yuan’s value should be revalued upward. The cost of labor in China is substantially lower than that in the United States.

  1. Would the U.S. balance-of-trade deficit in China be eliminated if the yuan was revalued upward by 20 percent? Or by 40 percent? Or by 80 percent?

 

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