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Post time 2005-10-14 18:25:19 |Display all floors
At the core of the conflict lies the issue of "currency manipulation," whereby China is maintaining its exchange rate to the dollar far below the market-determined level — and is thus gaining an unfair trade advantage.

The great anomaly, up to this point, of the Chinese economic strategy for market-based industrialization through open trade and foreign investment has been the maintenance of a non-convertible currency on the capital account, which is rigidly linked to the dollar.

After all, almost all less-developed — and even the least-developed countries — have some form of currency convertibility and exchange rate flexibility. That helps them avoid the economic distortions and corruption that result from a non-convertible currency that is fixed well above or below its market-based level.

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