Undervalued and Manipulated?

There has been a growing concern in recent years over China’s alleged unilateral and deliberate intervention in the foreign exchange market to prevent the appreciation of its currency relative to other currencies. By engaging in the alleged practice known as “currency manipulation”, China’s critics argue that its maintenance of an artificially undervalued currency in relation to other currencies provides an unfair competitive advantage to Chinese exporters, thereby thwarting global trade. As a result, the consistency of China’s exchange rate arrangements and foreign exchange market intervention with its obligations, namely those under the International Monetary Fund and the World Trade Organization have been called into question. Although exchange rate matters are traditionally viewed as falling under the jurisdiction of the IMF, the trade distorting effects of China’s exchange rate policies have resulted in calls from lawyers, economists, industry and lawmakers alike, demanding remedial trade measures under the auspices of the WTO. By engaging in a historically and empirically informed legal analysis, Undervalued and Manipulated explores whether China’s foreign exchange arrangements and foreign exchange market intervention are consistent with its obligations under the Articles of Agreement of the IMF and whether international trade measures under the auspices of the WTO can be used as an appropriate response to quell China’s alleged manipulation of its currency.