system as well as instability remain. The paper stresses that the imbalance between the United States and China has been … growing US current account deficit and, in parallel, the growing current account surpluses in China, other Asian countries … been regarded sustainable for a time being as long as China and other Asian countries continue to pursue export …

order to test the hypothesis, the paper estimates the effect of a common currency on China’s processing and ordinary exports … regional production networks, with final stages of assembly and exporting being increasingly concentrated in China. The short …-run dynamics indicate that the effect on China’s processing exports is more than double the corresponding effect on China …