Is the renminbi undervalued?

A debate has raged whether and to what extent the renminbi has been undervalued. <span style="color: #000000;">To answer this question this memorandum is first interested in the level of China’s “equilibrium†(real effective) exchange rate. </span> <span style="color: #000000;">Secondly, this memorandum is interested in the methodology to determine the equilibrium exchange rate.</span> <span style="color: #000000;">A survey of the literature concludes toward a renminbi undervaluation of about 25% in real effective terms. This undervaluation is not expected to disappear any time soon.</span>