Analysis: U.S. has a powerful, unused tool to beat China's yuan

The U.S. doesn't have to rely on negotiations or a trade war to overpower the harmful effect of China's currency policy on its labor market and trade, according to The Economist. The most powerful tool the U.S. can bring is to pursue adequate monetary and fiscal stimulus at home. "At the present nominal exchange rate, expansionary monetary policy in America would prove highly inflationary in China, which is a darn good reason for everyone in China (including those pesky exporters) to favour appreciation," the magazine notes.

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Economist (free content), The · Wall Street Journal, The ·