20 10 RMB exchange rate suddenly became the focus of international economic policy disputes in the fourth quarter. The U.S. House of Representatives passed a bill authorizing the Ministry of Finance to take countermeasures against countries that "subsidize exports" with undervalued exchange rates. The US Treasury Secretary also publicly stated that he would shift the main battlefield of the exchange rate dispute between China and the United States to the G20 venue in Seoul, South Korea. A new exchange rate war is either hidden or present. Undeniably, the escalation of exchange rate disputes stems from some fundamental economic factors. First of all, with the increasing economic growth in China, the long-standing "appreciation phobia" in our economic decision-making has aroused widespread concern. The usual international experience is that for every increase in per capita real income of 1%, the national real effective exchange rate will appreciate by 0.4%. Although China's GDP per capita increased by 200% from the beginning of 1998 to the beginning of 20 10, the real effective exchange rate of RMB hardly changed. What is more striking is that at the same time, the current account surplus is expanding rapidly. This has become the main evidence that the RMB exchange rate is undervalued, and the conclusion is that China has kept its export and economic growth artificially low for a long time. With the rise of China's international economic status, this problem has become more prominent-since it is a big country economy, any imbalance in our economy will have a certain impact on the global economy. A basic inference is that since we protect growth and employment through exchange rate policy, it may in turn affect growth and employment in other countries. The sharp depreciation of the dollar in the past few weeks has brought strong appreciation pressure to other currencies. Brazil, Japan and other East Asian countries have intervened to prevent the RMB from appreciating. Within a week, 25 countries intervened in the foreign exchange market, which made European and American countries have new concerns. In addition, some countries intervene because if the RMB does not appreciate, their export competitiveness and the pace of economic recovery will be directly affected if their currencies appreciate. As a result, the RMB exchange rate policy has naturally become the focus of controversy again. However, the recent escalation of the exchange rate dispute between China and the United States is actually mainly driven by "public opinion". The Sino-US economy is unbalanced, and the exchange rate certainly plays a role. But is this the most important factor? This is debatable. More importantly, most economists and government officials believe that even if the RMB appreciates, it will not effectively solve the current account deficit and high unemployment rate in the United States. A sharp appreciation of the renminbi may cause some manufacturing industries to flee, but most of them will be transferred to other low-income countries, not the United States. The key to solving the imbalance problem in the United States is to increase the savings rate, and it is not enough to rely solely on the depreciation of the US dollar. But American public opinion representatives obviously don't see it that way. At least verbally, they disagree with this view, mainly because the unemployment problem in China is serious and there is no good solution in the short term. Therefore, in order to improve the support rate among voters, they deliberately turned the focus of contradictions to RMB. The undervaluation of the RMB exchange rate has led to an increase in the unemployment rate in the United States-such a simple logic is easily understood and accepted by the public, so it has become a common public opinion. In fact, most government officials are aware of this problem, but they have no ability to go against public opinion, and they also need to find scapegoats for domestic economic difficulties. Therefore, the escalation of the exchange rate dispute between China and the United States has economic reasons, but it is more driven by public opinion, which is irrational in a certain sense. It seems that the RMB exchange rate has become the root of many international economic problems, which is obviously unreasonable. But we can't ignore it just because it is unreasonable. Although we now believe that there is little possibility of a real exchange rate war, if we can't deal with it effectively, the risk will soar. Once the protectionist policy of the United States becomes a reality, we will be directly hurt. How to deal with it is a big problem. Since the pressure comes from public opinion that is not completely rational, simply playing cards according to economic laws may not be the most effective solution. In short, the following measures are worth considering. First of all, China scholars should be encouraged to debate in international forums. When the whole world is criticizing China's exchange rate policy, we are mainly fighting back against government leaders and spokesmen.