Get with the times: Why Trump’s new attack on China is three years out of date

Republican US presidential candidate Donald Trump's latest attack on China is about three years behind the times.

In a column in The Wall Street Journal previewing a policy paper he released Tuesday, Trump wrote that “the worst of China's sins” is manipulating its currency to gain an economic advantage over the United States and other countries. Citing the estimates of unidentified economists, the real-estate magnate charged that “the yuan is undervalued anywhere from 15 per cent to 40 per cent,” giving Chinese exporters an unfair price edge in world markets.

For years, critics, including the US Treasury Department, complained that China kept its currency artificially low. And until perhaps 2012, it was probably true.

But the charge appears outdated now.

The yuan has risen nearly 5 per cent against the US dollar over the past five years — a period during which most major currencies fell against the dollar. The rising currency reflects China's increased global clout. By May of this year, the International Monetary Fund declared the yuan “is no longer undervalued.”

The Peterson Institute for International Economics publishes an interactive graphic showing which countries' currencies are out of whack with economic reality, starting with 2008. It shows the yuan being “significantly undervalued” until mid-2012 and reaching a more or less fair value last year.

“My analysis indicates that the currency has risen sufficiently that it's now no longer undervalued,” said Peterson senior fellow William Cline. Charging that China is manipulating its currency is “a good talking point,” Cline said, but “it's out of date.”