I will own that I don't fully understand the short or long term impacts of devaluing a currency on an economy. But if I had to guess, I'm betting on it not being a good thing when a finite group of people decide on manipulating a free market discipline.
This thought from MJ Perry gives more clarity to the issue...........
me break from [the] consensus about China's currency policy and present
an alternative position: In the best of all possible worlds for the
United States, China would use its labor and capital to manufacture
consumer products like clothing, footwear, furniture, electronics, and
appliances and send $300 billion worth of these products to U.S.
consumers for free every year as a gift or a form of foreign aid to the
American people. In addition, the Chinese would produce and send to
America another $100 billion worth of raw materials, parts, industrial
supplies, inputs, and natural resources at no charge, as a gift to
American manufacturers every year. (Note: That's roughly the amount of
goods we will purchase from China this year.) . . .
that extreme Chinese generosity is not realistic, so here's a possible
second-best outcome: . . . [China] agrees to send us $500 billion worth
of consumer and industrial goods every year, but agrees to sell us those
manufactured goods at a substantial 20 percent discount for only $400
billion. In that case, the amount of foreign aid will be less than the
$400 billion in the first example, but will still be significant—a $100
billion gift every year from the Chinese people to the American people.
will China generate this $100 billion in annual foreign aid to the
United States? One way is to keep its currency undervalued to bring
about the 20 percent discount on its products coming to America.
then raises the question: If China is willing to undervalue its
currency, and in the process provide approximately $100 billion of
foreign aid annually to American consumers and businesses, what's the
problem? Why should we complain?"
Read his blog here..........