Bush School Researchers Analyze Chinese Currency Manipulation, Impact on Trade Deficit

March 26, 2018

Cover image of the Chinese Takeaway


In the wake of heighten concerns over US tariff policy comes a new study at the Bush School of Government and Public Service at Texas A&M University suggesting that Chinese monetary policy may be contributing to the US trade deficit.

Entitled “Understanding China’s Currency Manipulation,” the research is summarized in the latest publication from the Bush School’s Mosbacher Institute of Trade, Economics, and Public Policy. Since 2005, China’s monetary regime has set the value of the Chinese Renminbi (RMB) rather than market forces. In this latest issue of The Takeaway, three Bush School students use research from one of their classes to enter the debate about whether China can be labeled a currency manipulator. Their analysis examined real exchange rates, and found evidence that China is undervaluing its currency to artificially inflate its net exports—to the benefit of US consumers but at the expense of the US trade deficit.

The researchers observed that the consistently low value of China’s currency increases Chinese exports to the United States and decreases prices paid by US consumers. Their data showed that while the United States-China real exchange rate fell, China’s share of the US trade deficit rose. The authors note that the response to this challenge is unclear. Cheaper goods benefit US consumers, while cheap imports hurt US producers as they lose market share to foreign companies. As well, China could offset any increase in tariffs with further currency changes.

This research was conducted by Rebecca Skaff, Lincoln Webb, and Kyle Clahane, second year Bush School students in the master of international affairs program. It was part of their work for a class on global economics taught by Dr. Raymond Robertson.

The full Takeaway can be found on the Mosbacher Institute website:

[Return to homepage]

Tags: News / Research /

Follow us!

In the Media

April 16, 2018: "Lebanon’s Precarious Place in the Syria War" U.S. News & World Report

April 09, 2018: "Focus at Four: Homeland security expert on sending the National Guard to the border" KBTX

April 04, 2018: "Policy conference to address Texas water concerns" The Battalion

April 04, 2018: "Oklahoma teacher pay dispute: Does cost of living make a difference?" PolitiFact

April 03, 2018: "The road to a better economic future" Khmer Times

Additional Media

Lastest Bush School News

Bush School Economist Exposes Groundwater Misconceptions

New I-School Dean Joins the Bush School Faculty

Bush School Students Give Back to Community in 2018 Big Event

Leading with loyalty to self and core values

An Evening with Bayan Sami Abdul Rahman, Kurdistan Regional Government Representative to the United

Bush School Faculty Researcher Encourages Entrepreneurship in Africa

Dean Mark Welsh receives National Public Service Award