THE EMPIRICAL CORRELATION BETWEEN US-CHINA TRADE BALANCE AND CHANGES IN THE YUAN-DOLLAR EXCHANGE RATE: A SURVEY OF THE EVIDENCE

The alleged undervaluation of yuan is blamed to be the main cause of rising levels of trade deficits in the United States. The major objective of the present research is to investigate and further analyze if and how changes in the value of China’s currency in the last 31 years (for which we have reliable monthly data) has produced an imbalance in the US-China trade patterns. This research is designed to clarify and empirically assess the extent to which the relative value of yuan against the US dollar has impacted United States imports from China.