Focus on quantities
By Daniel H. Neilson
Debate continues over what is the right level for the dollar–renminbi exchange rate. I find it hard to see how focusing on this one price will lead to a productive outcome, politically or economically. Debating the exchange rate focuses the attention on the metric that guides policy. A better approach is to focus on the other side of the coin, namely reserve accumulation.
China's accumulation of US dollar reserves, mainly Treasury debt these days, is not a by-product of its exchange-rate policy. It is the exchange-rate policy. Read more