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The Return of the Renminbi Rant

NEW HAVEN – China’s currency, the renminbi, has been weakening in recent months, resurrecting familiar charges of manipulation, competitive devaluation, and beggar-thy-neighbor mercantilism. In mid-April, the US Treasury expressed “particularly serious concerns” over this development, underscoring what has long been one of the most contentious economic-policy issues between the United States and China.

This is a timeworn debate – politically inspired and grounded in bad economics – that does a serious disservice to both sides by diverting attention from far more important issues affecting the US-China economic relationship. Taken to its extreme, America’s accusations risk pushing the world’s two largest economies down the slippery slope of trade frictions, protectionism, or something even worse.