Secretary of the Treasury Tim Geitner recently stated that China has "manipulated" its currency to gain an upper hand in its trade relations with the United States. Albert Keidel appeared on C-SPAN's Washington Journal to examine that claim and offer his thoughts on what the Obama administration's policy towards China will look like.
In six months, the Treasury Department of Treasury will report which countries are unfairly manipulating their currencies to achieve trade benefits. Keidel explained that it is difficult to assess whether China is manipulating the yuan since its economy is in such flux right now. He argued, furthermore, that it is difficult, if not impossible, to identify what the "proper" dollar-yuan exchange rate should be; he noted that while the yuan has indeed appreciated with respect to the dollar, it has depreciated compared to the euro.
Keidel expressed confidence that the Obama administration will continue the Strategic Economic Dialogue that Hank Paulson stewarded under the Bush administration, arguing that that dialogue has opened up high-level exchanges between American personnel and their appropriate counterparts in Beijing.