China Has Not Manipulated the Yuan, PIIE's Bergsten Says

The video discusses the misconception that China is manipulating its currency to harm the U.S. It explains that China has been stabilizing its currency for years, contrary to accusations. The recent slight devaluation is a market response to U.S. tariffs, not manipulation. The video explores China's potential responses, emphasizing that overt manipulation is unlikely due to fears of economic instability. Market forces are currently driving the currency's value, and China is cautious about letting it float freely to avoid capital flight.

What has China been doing with its currency over the past five years?

• Intervening to prevent it from weakening

• Allowing it to float freely

• Driving it down to gain a competitive edge

• Pegging it to the US dollar

How have Trump's tariffs affected China's economy?

• They have strengthened China's trade surplus

• They have led to a natural depreciation of China's currency

• They have had no impact on China's economy

• They have caused China to increase its interest rates

What is China's main concern if it allows its currency to float freely?

• It could cause a trade surplus

• It could lead to increased inflation

• It might strengthen too much

• It might fall significantly, prompting capital flight

What is the relationship between China's currency actions and Trump's trade threats?

• China is using its currency as a weapon against the US

• China is allowing slight depreciation in response to trade threats

• China is ignoring the trade threats

• China is increasing its currency value to counteract the threats

Why is China unlikely to let its currency plunge significantly?

• They have a fixed exchange rate policy

• They fear it would lead to economic instability

• They want to maintain a strong trade surplus

• They are confident in their economic growth