China's Dangerous Overvaluation Article Example | Topics and Well Written Essays - 500 words

China&aposs Dangerous Overvaluation - Article physical exertionBased upon labour costs and trade patterns, author is of the view that kwai is certainly overvalued by close to 15% suggesting that its time for China to take corrective measures. occasion suggests measuring increasing drive costs as one of the indicators to measure how much the currency has appreciated and as well as cites the fact that labor costs have increased more than the overall profitability of the Chinese companies.Author indicates that any nevertheless appreciation in the currency would actually be more harmful for the country because the overall aim of debt has been creeping up in the economy which would ultimately hurt the domestic consumption in China.Author suggests that to arrest the appreciation of Yuan, one way could be to allow domestic prices to adjust to the appreciated Yuan however this may result into difficult economic consequences whereas rebalancing from investment to consumption is recomm ended as an easier way to divvy up Yuan.Probably one of the biggest weaknesses of the article is the absence of any figures and data based upon which author made the claims. almost all the arguments are without any solid economic data and most arguments are relatively theoretical in nature. It would have been much better had the author used the real economic data to flow out the appreciation trends in the value of Yuan against the major international currencies specially US Dollar.It is also critical to note that China has basically not highlighted as to how an appreciated Yuan have been benefiting Chinese economy in maintaining healthy trade surplus besides emerging as the leading trade oriented economy in the world.An increase in the labor costs may not be one of the basic indicators of measuring the appreciation in Yuan. An increase in labor costs may also be due to the increasing specialization within the Chinese economy and the fact that Chinese workers may be gaining more advanced skills. Gaining more