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The U.S. has accused China of artificially deflating the value of their currency. What would be the motivation for the Chinese to pursue such a policy

User Thanos
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Answer: Cheaper exports

Step-by-step explanation:

A large part of the Chinese economy is dependent on the foreign trade it initiates with the rest of the world. Having a weak currency can aid that.

Export prices are quoted in the currency of the country doing the exporting so if their currency is weaker relative to a country they are exporting to, their goods will be cheaper in that market which will make people want to buy their goods more.

This is why China would deflate its currency. Having a weaker currency means their exports are cheaper which will increase the amount of it bought.

User Manthan Patel
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