A simple appreciation of the RMB would do.
These trade surpluses will continue to create frictions. Even friendly countries like Indonesia, Malaysia are raising barriers.
Getting trade barriers up while retaining a weak RMB is the worst case scenario.
I'm not so sure about that.
You're assuming that Chinese competitiveness stems from the exchange rate, but not from other factors like low costs due to low taxation, very low labor costs, and a fairly deregulated economy that encourages entrepreneurship, employment, and production. The country is designed for production.
While China encourages entrepreneurs, the West encourages BUREAUCRACY and TAXATION. Not only that, but also regulation, environmental protection, labor laws, oversight, unionism, among others.
A small gesture of appreciating the renminbi exchange rate, I don't know if it would be enough to completely diminish the competitiveness of Chinese products, but of course it would help improve import relations with the world, but I think that would have a minimal effect.
To be clear, I have always been honest about the Chinese export model:
Chinese Set to Spend Record $1 Trillion in Local Travel Boom https://archive.is/HcEE3
www.sinodefenceforum.com
I maintain the same position. For China, it makes sense to be an exporter, but this does not bring prosperity to all citizens who are far from the production and export chain. This should be a natural thing; I even believe that China would have a trade surplus, but US$1 trillion is totally exaggerated.
Can you imagine what US$1 trillion could do if it were reverted into more access to goods and services for all Chinese people? The Chinese standard of living would increase dramatically.
