Question

Most all people unwittingly purchase many imported goods. It might be an interesting exercise to check your recent purchases to see how many items include a "Made in China" tag. The U.S. has long criticized Beijing’s policymakers of keeping the Yuan (Chinese currency) artificially cheap to give Chinese exports an unfair advantage in global markets. Explain how China has been able to devalue their currency, the more specific the better.

Answer 1

China is a formerly communist country that has adopted several capitalistic reforms in the last decades, but all of the country's powers are still held by the communist party and its leader, in this case Xi Jinping.

In China, if you oppose the government, your life is at risk, and a very serious risk. The government does basically what it wants and there is no independent monetary authority. The central bank of China simply does what the communist party's leaders tells them to do. On the contrary, institutions like the FED of the European Central Bank are autonomous and they can act freely.

Everything in China is under government control and that includes commercial and investment banks, factories, etc. Since the government focuses on exporting goods, it will artificially keep the yuan undervalued because they simply can do it and no one can do anything about it. There is no such thing as a free currency exchange market in China.