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Who's a Currency Manipulator Now in Asia-Pacific? The Indicators Don't Point to China

With the arrival of the Trump administration in the U.S., the issue of currency manipulation has re-emerged as a top-tier issue. Specifically, the new administration has intimated that China, as well as other Asian countries, are manipulating their currencies to gain an unfair competitive advantage, although no official actions have been taken as of this writing. This issue harks back to a decade ago, when currency valuation, particularly relating to China, was front and center on the Asia-Pacific policy stage.

Against this background, S&P Global Ratings looked at a number of external competitiveness indicators over the past decade to see how they have evolved. Our goal was to come to a view on whether evidence of currency manipulation can be seen in the data. These indicators include: the current account balance, the real effective exchange rate and official reserves. Our sample comprised nine Asia-Pacific economies. We excluded the money centers of Hong Kong and Singapore since their size and structure typically lead to data outliers. We also excluded Australia and New Zealand because they are structural deficit countries and "presumed innocent." (Watch the related CMTV segment titled "Who's A Currency Manipulator Now In Asia-Pacific? The Indicators Don't Point To China," dated March 14, 2017.)


  • With the change in the U.S. administration, the issue of currency manipulation (mainly against China) has moved front and center in the policy debate for the first time in a decade.
  • We examined the competitiveness indicators of nine Asia-Pacific economies over the past decade, looking at current accounts, effective exchange rates, and reserve totals.
  • Our admittedly simple ranking of economies across these variables put China in last place; that is, with the lowest manipulation score. Data for Taiwan, South Korea, and Thailand suggest these economies exhibit the strongest evidence for manipulation.

Our main finding is that much has changed over the past decade. China came in last on our (admittedly simple) currency manipulation rankings owing to these reasons: a sizable decline in the current account-to-GDP ratio over the past decade; the strongest real effective exchange rate appreciation; and a relatively sharp decline in its official reserves. Taiwan took the "top" spot, followed by South Korea and Thailand.