The great China currency debate: for workers or speculators?

Everyone is talking about China’s currency, it seems. Amidst months of building tension, there is an apparent consensus among most economists, the financial press, and leading economic policy makers in the West that the renminbi is hugely undervalued, making China’s exports unfairly competitive. The global imbalances created by such ‘mercantilist’ and ‘protectionist’ exchange rate strategies, it is argued, have been a central cause of global financial instability. China must therefore revalue, for the good of both itself and the world.