"The time has clearly come, indeed has long since passed, to devise effective strategies to achieve adjustment of the world’s largest international imbalances: the US deficit and the Chinese surplus. Continued failure to do so will generate increasing risks of renewed financial crisis, encourage new outbreaks of restrictive trade measures as countries respond to China’s blatantly protectionist currency policy, trigger renewed transpacific tensions, and make it more difficult to reduce the US unemployment rate as China exploits demand in other countries to create jobs at home."

"Countervailing currency intervention would be decidedly superior to countervailing duties to deal with the problem of manipulated exchange rates. Undervalued currencies subsidize all of the exports of the country in question and pose a barrier of equivalent magnitude to all of its imports. Countervailing duties, however, address only exports of individual products from such a country on a case-by-case basis and do not apply to its imports at all. The currency approach is monetary and comprehensive whereas the trade tool, useful as it is for its intended purpose, involves cross-retaliation and s very selective in its application."

Elimination of the Chinese misalignment would create about half a million US jobs , mainly in manufacturing and with above-average wages, over the next couple of years. The budget cost of this effective stimulus effort would be zero.

"Hence it remains obvious that China is “manipulating” the value of its currency. This clearly violates both the international monetary rules of the IMF Articles of Agreement and the global trading rules of the WTO Charter."