In this article : https://www.epi.org/blog/trumps-china-tariff-confusion-it-wont-solve-chronic-trade-deficits/ they claim that depreciating the value of the yuan to the USD bolstered China’s economy. The key excerpt is:
For a long time, the fundamental cause of this growing trade chasm with China was Beijing’s deliberate currency undervaluation. Between 2000 and 2013, China invested more than $4 trillion—nearly 40 percent of its current GDP—in foreign currency assets, primarily U.S. Treasury securities.
And it paid off, since it drove down the value of the Chinese yuan relative to the U.S. dollar. This served as a massive subsidy for Chinese exports and a tax on U.S. products shipped to China.
My questions are:
(1) How does investing in US assets drive down the value of the yuan?
(2) If the value of the yuan to the USD diminishes, doesn’t that increase the purchasing power of US entities* for products in China e.g. A US citizen can purchase a house in China for less USD. So why is this deleterious for the US and beneficial for China?
*not sure if that’s the correct word to use here. Please feel free to reword q