About time too. This week the International Monetary Fund turned down the heat under one of the longest-simmering disputes in international economics by declaring China’s currency, the renminbi, no longer undervalued.
The US Treasury, which has led the campaign to brand China a currency manipulator for holding down the renminbi, unsurprisingly disagrees. But the IMF’s assessment, which echoes that from reputable independent economists, suggests that the exchange rate is no longer a major impediment to China’s long-awaited rebalancing from exports to domestic demand.
For more than a decade, pressing China to let therenminbi rise was the number one focus of US international economic policy. It tried public condemnation; it tried quiet diplomacy. It contemplated a quixotic idea, often mooted in Congress, to take Beijing to the World Trade Organisation over the issue. It tried — unwisely for the fund’s independence — to turn the IMF into a currency sheriff to go after misaligned miscreants; it tried rounding up a posse in the G20 to do the same.