China’s financial system, not renminbi, source of imbalances: St Louis Fed paper
A St Louis Federal Reserve paper published on Tuesday suggests that revaluing the renminbi will not necessary resolve the US trade-imbalance problem with China and may even prove counterproductive.
Yi Wen, the paper's author, examines the driving force behind the large accumulation of savings in China in a financial system with uninsured risk, severe borrowing constraints and rapid income growth.
Yi says China's $2.4 trillion foreign reserves may be a natural consequence of rapid economic growth
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