As Chris Dillow pointed out last week, world trade has collapsed. Industrial production in, and exports from, Asian countries such as Korea, Taiwan and Japan have fallen by mind-boggling amounts, causing sharp slide in currencies like the Won and the Taiwanese dollar. This in turn has made Chinese exports more expensive in relative terms. At the same time, officials in the incoming US administration have protested that the Chinese currency, the yuan, is being deliberately manipulated. What will China do - devalue, and incur the wrath of Washington, or hold firm, and risk social unrest as economic growth slows down. Two experts debate whether China will devalue or not.
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