China's Exchange Rate Trap: Japan Redux?

摘要

International saving and current-account imbalances aside, suppose a country such as China with low wages, but very high productivity growth, trades with a country such as the United States with much lower productivity growth, but higher real wages. When wages are "sticky" as traditional theory would have it, isn't exchange rate flexibility, with ongoing appreciation of the renminbi, more or less necessary to balance international competitiveness?