Beijing is now telling the United States that it cannot win a trade war with China.

This contention is breathtakingly bold — and unsupportable. In reality, it is China that cannot prevail.

“Why the U.S. Can’t Win the Trade War With China — and Shouldn’t Try,” argues that the relationship between the renminbi and the dollar means that large trade imbalances in China’s favor will persist.

“At the heart of Sino-American trade tensions is the claim that China’s surging exports are a result of Chinese subsidies,” reads the article published on the Project Syndicate site. “But the driving force behind this glut of cheap goods is a significantly undervalued renminbi, a result of high capital outflows caused by both domestic policies and U.S. restrictions on investment in China.”

“Over a decade ago, China’s trade surplus was largely the result of an undervalued renminbi,” the author points out. “Today’s circumstances are somewhat similar. My research shows that in 2023, the [renminbi] was 16 percent undervalued against the dollar, contributing to China’s high exports and trade surplus.”

The piece notes that “the extent of the [renminbi’s] undervaluation in recent years has also significantly increased.”

As an initial matter, the article's technical analysis overstates the effect of the currency on deficits. As Francesco Sisci, a Beijing-based scholar of the Appia Institute told me this month, China’s “whole system hinges on........

© The Hill