From the WSJ: "Since the January 2011 visit of Mr. Hu, the yuan has appreciated 11.9% against thge dollar when accounting for inflation, according to Brookings Institution researcher Karim Foda, including a 1.8% increase since the beginning of this year. The appreciation has come at a tough time for China's exporters, giving Mr. Xi a strong argument the U.S. should ease criticism of China's currency policies" (*).
Good point. In any country where the cost of capital is high, currency appreciation can be a letal recipe — high cost of capital and high cost of labor. But is the cost of capital that high in China? How do we know? We'll know when the bond market becomes more relevant, replacing bank credit as the main source of funding for Chinese companies.
(*) Bob Davis: "China, U.S. Growth: Tables Have Turned", Wall Street Journal, June 7-9, 2013.
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