When last China Real Time delved into the valuation of Chinese yuan, economist Arvind Subramanian of the Peterson Institute for International Economics came to a surprising conclusion: The yuan was no longer undervalued. China might be shedding its mercantilist ways, he wrote with a co-author, after analyzing new data on global pricing released by the World Bank.
Nowhere was that conclusion more controversial than in the elegant Massachusetts Avenue home of the Peterson Institute itself in Washington, D.C., where several other scholars have been arguing for years that the yuan is so undervalued that it represents an unfair subsidy for China's exporters. Fred Bergsten, founding director of the
'Arvind's latest analysis is hopelessly simplistic,' Mr. Bergsten wrote to China Real Time. ' [His] empirics are also widely inconsistent,' he complained, saying that the World Bank numbers weren't really suitable for computing the yuan's valuation.
The World Bank had presented new data on what's known as purchasing power parity--how much a given service costs in different countries. PPP tend to make developing countries look richer because, say, the cost of computer repair is far cheaper in Shanghai than it would be in Seattle or Siena.
Far from backing down, Mr. Subramanian retorted, via email: 'Fred's pre-occupation (obsession?) with China makes him render a partial verdict,' and cited a number of economists who had used PPP to make currency valuations.
This isn't merely an academic debate. The U.S. Congress and China's trading partners look closely at Beijing's currency policy to see whether it's manipulating the yuan to give its traders an unfair edge--and they count on Peterson economists for analysis. Indeed, U.S. Treasury Secretary Jacob Lew is due in Beijing today, in part, to press China to let the yuan climb in value again after falling nearly 3% so far this year.
Several other economists at Peterson--perhaps the world's leading international economic think tank--joined in the e-mail fray, citing obscure economic theorems and common-sense observations. Joseph Gagnon noted that one indication that the yuan is still undervalued is that China keeps intervening to keep it from rising (or in recent months, to reduce the yuan's value).'The proof of disequilibrium is that China has continued to purchase large quantities of FX to hold down its currency,' Mr. Gagnon wrote.
To try to clear up the controversy, China Real Time asked the economists on the email train to give their own estimate of China's under/over valuation. As might be expected from the email exchange, they didn't share a single point of view. Peterson doesn't hire wallflowers.
Mr. Bergsten, Mr. Gagnon, Morris Goldstein and John Williamson -- all of whom have made currency estimates for years -- argued that the yuan is significantly undervalued.
'The RMB is obviously undervalued by a very large amount because China bought about $500 billion in 2013 to keep it from rising (and, as best we can tell, is intervening at a similar pace this year),' Mr. Bergsten wrote. 'This means they are buying about $2 billion every working day to keep the dollar's price up and the RMB's price down!'
His ally in the battle, Mr. Williamson, noted:'I regard the yuan as continuing to be undervalued because I think a sensible objective for China would be to target a gradual rundown of their reserves. (China) would need a substantial appreciation of the RMB to achieve this.'
As for Mr. Goldstein, he wrote in the email that the yuan has been undervalued, when accounting for inflation, 'since about 2003-2004 -- reaching a peak under-valuation in the neighborhood of 30-40 percent in 2007 (when China's global current-account surplus was about 10 percent of GDP and when the economy was much overheated). Since 2007, the degree of under-valuation has declined significantly but has not yet gone away completely.'
Mr. Subramanian stuck to his guns and his study, saying the yuan was fairly valued and that the PPP numbers are a valid way of estimating a currency's value. 'It provides a relatively objective benchmark for evaluating exchange rates,' he wrote.
William Cline makes what's closest to an official Peterson estimate of yuan valuation-- his estimates are published semi-annually by the think tank. His new estimates are expected out in the next few weeks, but he gave China Real Time a sneak preview:
'For China, it looks as if the estimate will be that the yuan is undervalued by about 3 percent compared' with what's known as its equilibrium rate. Undervalued, but not by a heck of a lot.
An outsider to the Peterson crew--OK, he's on the think tank's advisory board--Harvard economist Kenneth Rogoff chimed in to offer a word of caution about any estimate.
'It is important to bear in mind that one can typically only estimate a broad band for the equilibrium exchange (say plus or minus 8 percent), so there is a high degree of residual uncertainty,' wrote Mr. Rogoff, a former chief economist at the International Monetary Fund.
《中国实时报》(China Real Time)上次研究人民币估值问题时，彼得森国际经济研究所(Peterson Institute of International Economics)经济学家Arvind Subramanian得出一个令人意外的结论：人民币币值不再被低估。在分析了世界银行(World Bank)发布的最新全球物价数据后，他和另一位作者共同写到：中国可能正在摆脱重商主义经济模式。
而围绕这一结论最为激烈的争议就存在于彼得森国际经济研究所内部。这家研究所总部位于华盛顿的马萨诸赛大道上。这里的另外几位学者多年来一直辩称，人民币币值被低估，相当于对中国出口商提供了不公平的补贴。该研究所的创始人兼所长贝格斯腾(Fred Bergsten)现在也是一名学者，他甚至敦促美国向世界贸易组织(World Trade Organization, 简称WTO)就中国的外汇政策起诉中国。但迄今为止唯一采纳他建议的只有《纸牌屋》(House of Cards)里的那位总统（第一季中的总统，而非史派西(Kevin Spacey)饰演的总统）。
贝格斯滕、加尼翁、戈尔茨坦(Morris Goldstein)和威廉森(John Williamson)进行汇率估算已有多年，他们均认为人民币被大幅低估。
哈佛大学经济学家、国际货币基金组织(International Monetary Fund，简称IMF)前首席经济学家罗戈夫(Kenneth Rogoff)不是彼得森国际经济研究所的一员。