The high level of consumer price inflation in China is a poor guide to how the competitiveness of its exporters is changing. Foodstuffs apart, factory gate prices are today rising only slightly faster than in the US. Over the past five years they have risen much less. The implication is that the renminbi’s 24% nominal appreciation against the dollar since 2005 overstates the degree to which export competitiveness has been eroded.
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