The Myth Of China's Currency Manipulation

The Myth Of China's Currency Manipulation

Populists keep the legend alive

Five or six years ago, in the green room of the D.C. satellite of Fox News, I met Sen. Lindsey Graham (R-SC). Upon discovering that I once taught economics at Clemson University and had lived in Seneca, SC (where he has a home), he inquired about my opinion of Chinese currency manipulation. No more than ten words of my reply escaped my mouth before it become clear that Sen. Graham was not really interested in my opinion.

Instead, he assumed that I shared his notion that the Chinese government manipulates the yuan in order to render that currency unfairly undervalued against the U.S. dollar — and that this undervaluation, in turn, harms...