The price of China's yuan manipulation: American jobs

The IMF announced that the yuan was no longer overvalued, but history teaches us its trade surplus should now be drying up - and it's not. Meanwhile the US economy could take a hit as a strong dollar (rightly) leads to a trade deficit

China's yuan is no longer undervalued - or so the International Monetary Fund said last month.

The basis for this claim is that China's central bank is no longer engaged in large-scale interventions in currency markets and its trade imbalance is within a normal range. After being as high as 10% of GDP in 2007, China's trade surplus is now just over 2% of its GDP. With this drop in the trade surplus, the IMF was effectively declaring mission accomplished. If only it was so simple.