In a recent Wall Street Journal article, BWC Member Mark Sobel examines why China’s yuan remains significantly undervalued despite President Xi Jinping’s preference for a stronger currency. Sobel argues that the yuan’s low valuation reflects China’s underlying economic model rather than exchange rate policy alone. He explains that high household savings, state-directed investment, and weak domestic consumption continue to generate large export surpluses that keep the currency artificially cheap. While the yuan could appreciate gradually without hurting China’s competitiveness, he argues that lasting change would require broader economic reforms to reduce the country’s reliance on exports.

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All views expressed by members are their own and do not necessarily reflect the views of the Bretton Woods Committee.