Is the Chinese Currency Undervalued?
While many of China’s illicit trade barriers have resulted in significant losses and potential losses to U.S. exporters, the debate in the United States has focused obsessively on the “undervaluation” of China’s currency. In fact, China’s yuan has been pegged to the U.S. dollar for nearly a decade at 8.28 yuan to the dollar. Many American manufacturers are suspicious of the “undervalued” yuan because, in far too many cases, finished Chinese goods can be imported into the United States at prices cheaper than the raw materials costs to the U.S. manufacturer of identical products. In most cases, however, the high cost of basic raw materials to U.S. manufacturers can probably be traced to the high capital investment costs to domestic raw materials producers. The additional environmental, regulatory, community compliance, and energy costs of an aluminum smelter or petrochemical refinery in the United States, for example, are so onerous that not one oil refinery has been built in the United
