In a study subtitled “Decoding the Cleavage between the Chinese Ministry of Commerce and the People’s Bank of China,” Charles Freeman and Wen Jin of the CSIS explain how those two ministries are the lead protagonists in the battle over both currency revaluation and the restructuring of the economy.
The scholars do not reach any specific conclusions, but they do lay out the respective views of the two agencies, their roles in the debate, and in so doing attempt to determine how the debate will translate into concrete policy.
If you read the headlines in China, the PBOC seems to be winning: the RMB is on a gradual devaluation path, and factory owners in eastern China (especially Wenzhou) are feeling the pain. What makes this study particularly interesting, though, is the hints it offers as to how currency policy might change in the face of major domestic dislocations.
What I like best about this short but sweet piece is that it properly frames the debate over the valuation of the RMB as a domestic Chinese debate, not a global one. The government is not a monolith, and Americans who seek the devaluation of the RMB have allies in China.
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