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Source: www.aei.org – Saturday, February 18, 2017
My CD blog post a few days on China’s alleged “currency manipulation” (“ We should thank, not condemn, our generous Chinese benefactors for ‘manipulating’ the currency in our favor “) provoked a lively discussion and generated more than 100 comments so far. Here’s another post on the topic of currency manipulation , with a few additional thoughts: 1. Claims have been for a least a decade that China has been manipulating its currency for at least 15 years to keep the yuan artificially undervalued (and the US dollar artificially overvalued) to allegedly gain an unfair advantage over the US in trade. With a “manipulative” strategy of keeping the yuan weak and the dollar strong, China can artificially boost exports to the US by lowering the dollar cost of its exports, and artificially reduce our exports to China by raising the yuan cost of US products. And yet the top chart above of the Yuan/USD exchange rate (inverted) shows that the yuan was steadily appreciating between 2005 and 2014, a period during which China was allegedly engaged in currency manipulation to keep the yuan undervalued . During that period, the yuan appreciated (and the dollar depreciated) by 27%, which means that China’s exports to the US got 27% more expensive in dollar terms. That trend in the yuan appreciating significantly over almost a ten-year period seems to run counter to the arguments made that China was keeping its currency artificially undervalued. If

Continue on source: Some thoughts on China’s alleged ‘currency manipulation’ – it’s a story that falls apart under close examination