Greg Ip: Revalued yuan affects China trade surplus by income shift

Greg Ip: Revalued yuan affects China trade surplus by income shift
Yuan revaluation could shift China surplus

Greg Ip discusses how a revalued yuan may reduce China's trade surplus not through direct changes in relative prices, but by shifting income from the export sector to the consumer sector.

He also suggests that adjusting the yuan is among the few effective tools available globally to encourage China to rebalance its economy, noting that appealing to China's self-interest has not worked.

Greg Ip has recently covered other central bank developments. He reported that Fed policy rules prescribe higher interest rates, with the current gap similar to 2019 and smaller than in 2021-22. In a separate article, he noted that Kevin Warsh avoided discussing the future path of U.S. interest rates, raising questions about central bank strategy.

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