Dean Baker — Why Should the United States Be Concerned If China Stops "Manipulating" Its Currency?

The way China kept down the value of its currency was buy buying up government bonds with the dollars it acquired instead of just selling them in the open market. If China now decides to sell these bonds, it should mean that its currency will rise, thereby reducing the U.S. trade deficit. It's hard to see what the problem is here.

Well, one (pseudo) problem I can see here is that many in the US will freak out because the yuan is getting stronger than the dollar. 

If the strength of the yuan is under that of the dollar, China is manipulating its currency. If the yuan is stronger than the dollar, then the search will be on to blame someone for weakening the dollar.

It's an argument that can't be won. Damned if you do and damned if you don't.

Beat the Press
Why Should the United States Be Concerned If China Stops "Manipulating" Its Currency?
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C