Data Dictionary – infrastructure investment (Gross fixed capital formation) has been driving China’s GDP growth over the last decade and they are trying to engineer a shift to a more consumption driven economy.
China’s Currency Continues to be Undervalued – William R. Cline discusses his latest study with John Williamson on fundamental equilibrium exchanges rates (FEERs) and its conclusion that the renminbi remains undervalued
The rmb has actually risen by all of 5 percent against the dollar over the last year–doesn’t get the job done, because the dollar’s gone down against other currencies and there’s been virtually no change in the trade-weighted strength of the rmb. The countries we identify as being overvalued include some of those already at that time: Brazil in particular, Turkey, South Africa. And the countries undervalued as I say include the same suspects: Hong Kong, Malaysia, Singapore, Taiwan in addition to China, also to some extent Sweden and Switzerland. The authors’ calculations show the need for a slightly larger effective revaluation of the Chinese currency, the renminbi, this year (17.6 percent) than last (15.3 percent) and a larger appreciation of the renminbi in terms of the dollar (28.5 percent rather than 24.2 percent).