Commentary
Yukon Huang, Isaac B. Kardon, Matt Sheehan
{
"authors": [
"Yukon Huang"
],
"type": "legacyinthemedia",
"centerAffiliationAll": "dc",
"centers": [
"Carnegie Endowment for International Peace",
"Carnegie China"
],
"collections": [
"China’s Foreign Relations",
"U.S.-China Relations"
],
"englishNewsletterAll": "asia",
"nonEnglishNewsletterAll": "",
"primaryCenter": "Carnegie China",
"programAffiliation": "AP",
"programs": [
"Asia"
],
"projects": [],
"regions": [
"United States",
"East Asia",
"China"
],
"topics": [
"Economy",
"Trade"
]
}
Source: Getty
In The Media
Anti-China Legislation Is Not the Solution
Blaming the undervalued Chinese renminbi for America's economic ills is convenient but counterproductive, given the complicated causes of U.S. trade imbalances.
By Yukon Huang
Published on Oct 13, 2011
Source: U.S. News and World Report
China's exchange rate has appreciated by more than 25 percent over the past six years and Beijing intends for it to appreciate steadily by 5-6 percent annually. As the U.S. dollar strengthened over the past several months in response to the problems in the eurozone, the renminbi has been the only major trading currency to appreciate while the others have typically depreciated by 5-10 percent. And China has cut its trade surplus from the 7-8 percent of GDP five years ago to a projected 1-2 percent this year. Although foreign reserves continue to mount, this has more to do with capital inflows seeking higher returns—nurtured by expansionary U.S. monetary policies—than by an undervalued renminbi.
But more importantly, fixating on bilateral trade balances is meaningless when global production is being outsourced to production sharing networks and the supply chain is managed by the Walmarts and Apples of the world. Half of China's exports are "processed" products that draw on a variety of components produced primarily throughout East Asia—but also the United States and Europe—and are ultimately assembled in China. The finished products are then exported primarily to major economies, but also increasingly to other developing countries. This processing trade actually accounts for China's trade surplus as the remainder, which draws exclusively on domestic resources, generates a trade deficit. This means that the U.S. deficit with China is really a deficit with East Asia as a whole.
Addressing global imbalances requires multilateral solutions and cooperation rather than something like an anti-China currency bill that only fans counterproductive sentiments.
About the Author
Yukon Huang
Senior Fellow, Asia Program
Huang is a senior fellow in the Carnegie Asia Program where his research focuses on China’s economy and its regional and global impact.
- Three Takeaways From the Biden-Xi Meeting
- Europe Narrowly Navigates De-risking Between Washington and BeijingCommentary
Yukon Huang, Genevieve Slosberg
Recent Work
Carnegie India does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
More Work from Carnegie India
- India Signs the Pax Silica—A Counter to Pax Sinica?Commentary
On the last day of the India AI Impact Summit, India signed Pax Silica, a U.S.-led declaration seemingly focused on semiconductors. While India’s accession to the same was not entirely unforeseen, becoming a signatory nation this quickly was not on the cards either.
Konark Bhandari
- The Impact of U.S. Sanctions and Tariffs on India’s Russian Oil ImportsCommentary
This piece examines India’s response to U.S. sanctions and tariffs, specifically assessing the immediate market consequences, such as alterations in import costs, and the broader strategic implications for India’s energy security and foreign policy orientation.
Vrinda Sahai
- India-China Economic Ties: Determinants and PossibilitiesPaper
This paper examines the evolution of India-China economic ties from 2005 to 2025. It explores the impact of global events, bilateral political ties, and domestic policies on distinct spheres of the economic relationship.
Santosh Pai
- NISAR Soars While India-U.S. Tariff Tensions SimmerCommentary
On July 30, 2025, the United States announced 25 percent tariffs on Indian goods. While diplomatic tensions simmered on the trade front, a cosmic calm prevailed at the Sriharikota launch range. Officials from NASA and ISRO were preparing to launch an engineering marvel into space—the NASA-ISRO Synthetic Aperture Radar (NISAR), marking a significant milestone in the India-U.S. bilateral partnership.
Tejas Bharadwaj
- Hidden Tides: IUU Fishing and Regional Security Dynamics for IndiaArticle
This article examines the scale and impact of Chinese IUU fishing operations globally and identifies the nature of the challenge posed by IUU fishing in the Indian Ocean Region (IOR). It also investigates why existing maritime law and international frameworks have struggled to address this growing threat.
Ajay Kumar, Charukeshi Bhatt
