IDEAS home Printed from https://ideas.repec.org/p/fip/fednls/86756.html
   My bibliography  Save this paper

Would a Stronger Renminbi Narrow the U.S.-China Trade Imbalance?

Author

Abstract

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.

Suggested Citation

  • Matthew Higgins & Thomas Klitgaard, 2011. "Would a Stronger Renminbi Narrow the U.S.-China Trade Imbalance?," Liberty Street Economics 20110713, Federal Reserve Bank of New York.
  • Handle: RePEc:fip:fednls:86756
    as

    Download full text from publisher

    File URL: https://libertystreeteconomics.newyorkfed.org/2011/07/would-a-stronger-renminbi-narrow-the-us-china-trade-imbalance.html
    File Function: Full text
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    China; exports; dollar; merchandise; trade; imports; renminbi; United States;
    All these keywords.

    JEL classification:

    • F00 - International Economics - - General - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fednls:86756. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gabriella Bucciarelli (email available below). General contact details of provider: https://edirc.repec.org/data/frbnyus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.