ZHANG Xin, SUN Gang：Dual Characteristics of Exchange Rate and the Dispute on RMB Between China and the US——Is China a Currency Manipulator?

Abstract：RMB exchange rate has been one of the most controversial issues between China and the US. We conduct empirical analysis on the equilibrium exchange rate of RMB and China's currency intervention by using Two-tier Stochastic Frontier Model which is based on the dual characteristics of exchange rate and corresponding exchange rate determination theory. Results show that, government intervention is not the main factor which make RMB exchange rate deviate from the equilibrium level. Furthermore, it has obvious tendentiousness to appreciate the currency. Due to government intervention, the real exchange rate of RMB has been overvalued to a certain extent, which is contrary to the blames from some foreign scholars, and it is obvious during the international financial crisis. Therefore, the Chinese government has intervened RMB exchange rate in a certain degree, but China cannot be regarded as a currency manipulator.

Key words： Dual Characteristics of Exchange Rate    Exchange Rate Determination    Exchange Rate Manipulation   Two-tier Stochastic Frontier Model

source:Finance & Trade Economics ,No.8,2015