A smarter approach to the yuan

The best law schools and public policy graduate schools inculcate in their students an ability to make the strongest possible case in favor of a position or policy with which they disagree. The test of whether the lesson has been truly learned is whether those who favor the position would accept its rendition as a fair and effective representation of why they favor it. With this in mind, I present below the argument for the U.S. stance favoring a substantial rise in the undervalued Chinese yuan. The U.S. position has been repeatedly stated, albeit in abbreviated and nuanced form, by President Obama and Treasury Secretary Geithner. It is also reflected in the large bipartisan majority in the House of Representatives that approved legislation to allow a retaliatory tariff on China's exports to the U.S. unless China revalues its currency. It has been expressed more vociferously and combatively by key leaders in the Senate, and by politically-charged commentators including Paul Krugman. Once the case for this "pro" position has been presented fairly and fully, I will explain why I think it is fundamentally wrong. I will then go on to suggest measures that would be more appropriate and effective in contributing to a "rebalancing" of China's international accounts as well as those of the U.S. than would a revaluation of the Chinese yuan. In early January, when President Hu Jintao met in Washington, D. C, with President Obama, the agenda for the meeting deftly acknowledged the presidents' disagreement on the currency issue without discussing, let alone resolving, it. Adapted from the source document.