Would a Stronger Renminbi Narrow the U.S.-China Trade Imbalance?
Matthew Higgins () and
No 20110713, Liberty Street Economics from Federal Reserve Bank of New York
The United States buys much more from China than it sells to China—an imbalance that accounts for almost half of our overall merchandise trade deficit. China’s policy of keeping its exchange rate low is often cited as a key driver of that country’s large overall trade surplus and of its bilateral surplus with the United States. The argument is that a stronger renminbi (the official currency of China) would help reduce that country’s trade imbalance with the United States by lowering the prices of U.S. goods relative to those made in China. In this post, we examine the thinking behind this view. We find that a stronger renminbi would have a relatively small near-term impact on the U.S. bilateral trade deficit with China and an even more modest impact on the overall U.S. deficit.
Keywords: China; exports; dollar; merchandise; trade; imports; renminbi; United States (search for similar items in EconPapers)
JEL-codes: F00 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-int
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
https://libertystreeteconomics.newyorkfed.org/2011 ... trade-imbalance.html Full text (text/html)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:fip:fednls:86756
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in Liberty Street Economics from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by ().