RMB Appreciation And U.S. Inflation Risk

The value of the Chinese RenMinbi (RMB) has increased more than 21 percent against the U.S. dollar since 2005. This would be good news for the United States if increased costs of Chinese imports (as a result of the appreciated RMB) made U.S. consumers purchase fewer Chinese goods and reduced its trade deficit with China. However, U.S. imports from China have been increasing. Between 1999 and 2010, the share of Chinese goods among total U.S. imports has increased from 6.9 percent to 16.1 percent, and the share of Chinese imports among total U.S. consumer expenditures has increased from 1.3 percent to 3.6 percent.

Provided by: Federal Reserve Bank of St. Louis Topic: CXO Date Added: Jun 2011 Format: PDF

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