This morning the Chinese currency recorded a new record against the dollar, at 6,48. And on Friday the US Treasury, in its periodic report to Congress, did not label China as a 'manipulator' of the yuan: it preferred to avoid confrontation, aware of the fact that sermons to the Chinese hit a brick wall.
The Treasury merely acknowledged that the yuan/renmimbi has appreciated in recent years and also, predictably, added that the pace of appreciation is too slow and China should do more. Indeed, China is doing more, albeit unintentionally.
Chinese consumer prices in April increased by 5,3% over 12 months, against 3,1% for American prices. Real appreciation is therefore stronger than nominal. And it is even stronger if we look at wage trends: here the difference between the growth rates of labor costs in China and in the USA (or in Europe) is about ten points.
