Dr. Gene Chang, professor of economics at the University of Toledo and co-editor of the China Economic Review, presented his research on currency valuation and the foreign exchange system in China on November 11th, 2003, at Technology Square on the Georgia Tech campus.
Dr. Chang emphasized the importance of the two-way relationship between the U.S. and China. In August, China overtook Mexico as the U.S.’s 2nd largest trade partner based on total trade volume. Using current exchange rate conversion values, China’s economy is one tenth the size of the U.S. economy, but if purchasing power is taken into consideration, China’s economy is over half the size of the U.S.
On the value of China’s currency, the Renminbi or Yuan, Dr. Chang summarized a wide variety of existing views on the subject. Depending on how estimates take non-traded goods into account, results range from 50 to 10% undervalued. Dr. Chang’s results suggest that the Renminbi is approximately 20% undervalued at this time. He suggested that continued free trade and gradual revaluation of the Renminbiwould be the best strategy going forward.
Quarterly essays on greater China by scholars who study the region closely, plus notice of our Atlanta events. Published continuously since 2002.