The size of the imbalance in China’s external payments suggests that the RMB is significantly undervalued. This does not appear to have had significant adverse effects on the Chinese economy to date, but the costs of holding down the exchange rate are likely to rise in the future. While the...

This article examines the evolution of net foreign liabilities as a share of GDP in Australia and the United States. The two countries have been running similarly large current account deficits in recent years. But while net foreign liabilities have been growing steadily as a share of GDP in...