The Most Useful Graph You'll See About 'Currency Wars'

It's this one, from the "Geo-Graphics" feature on the Council on Foreign Relations site today:


What does it show? That when the Chinese government let the value of the RMB go up starting in 2005 (rising red line), two things happened. Chinese exports grew more slowly and in the depth of world recession actually went down (descending blue/black line), and Chinese household spending went up (rising green line).

Then, when the Chinese government froze the RMB's value again starting in 2008, both those trends stopped or reversed.

It really is amazing when real-world economic data turns out the way supply-demand charts would predict!

As a reminder, the point of urging/enticing/persuading the Chinese government to let the RMB  go up again is not to move any specific factory from Xiamen to Sheboygan. It is to encourage exactly the two trends shown by the black and green lines: lower overall export surplus from China, and greater overall household spending within China. This chart suggests that it actually worked that way the last time around.
Presented by

James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne. More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

Fallows welcomes and frequently quotes from reader mail sent via the "Email" button below. Unless you specify otherwise, we consider any incoming mail available for possible quotation -- but not with the sender's real name unless you explicitly state that it may be used. If you are wondering why Fallows does not use a "Comments" field below his posts, please see previous explanations here and here.


Cryotherapy's Dubious Appeal

James Hamblin tries a questionable medical treatment.


Confessions of Moms Around the World

In Europe, mothers get maternity leave, discounted daycare, and flexible working hours.


How Do Trees Know When It's Spring?

The science behind beautiful seasonal blooming

More in Global

From This Author

Just In