Finance & Business World

Nobel laureate Paul Krugman said China is devaluing its currency and undermining the global economic recovery by “stealing” jobs that otherwise would have gone to nations that aren’t growing as quickly.

By pursuing a weak-currency policy, China is siphoning demand away from other nations including poor countries, Krugman wrote in an article titled “The Chinese Disconnect” in the New York Times.

“In normal times, I’d be among the first to reject claims that China is stealing other peoples’ jobs, but right now it’s the simple truth,” the Princeton University professor said.

U.S. officials have been “extremely cautious” about confronting China on the issue, an approach that “makes little sense,” he said.

While the dollar has fallen 14 percent against the euro and 7 percent versus the yen since mid-March, China’s authorities have kept their currency little changed.

The U.S. economy would benefit if China began selling its “dollar hoard,” which Krugman says is currently worth about $2.1 trillion, because it would make American exports more competitive.

“With the world economy still in a precarious state, beggar-thy-neighbor policies by major players can’t be tolerated,” Krugman said. “Something must be done about China’s currency.”

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