They argue a mix of two things: one, that exchange rate moves don’t have all that much of an impact, and two, that pressure for a stronger RMB wouldn’t really work even if China moved the exchange rate a bit, because any nominal appreciation of the currency would result in more deflation and thus no change to the inflated-adjusted value of the yuan. The correct policy, they argue, is to wait for China to conclude on its own that it needs to do more to support domestic demand, as stronger domestic demand growth will eventually reflate the Chinese economy and generate a real appreciation of the yuan.
