From Fred Bergsten:
But China and some other emerging markets, especially in its immediate neighborhood, are also violating some of the most fundamental rules of the international economic system, to the great detriment of the United States and many other countries. A cardinal goal of the International Monetary Fund, which was created to avoid replication of the beggar-thy-neighbor policies that deepened the Great Depression, is to prevent competitive currency devaluations through which countries keep their currencies cheap to provide large price advantages for their exporters and their firms that compete with imports. Yet China has intervened massively in the foreign exchange markets for at least five years, buying at least $1 billion every day to keep the dollar strong and its own renminbi weak. The result is an undervaluation of the renminbi of at least 20 percent, which is the equivalent of a subsidy of 20 percent on all China’s exports and an additional tariff of 20 percent on all China’s imports. This is by far the largest protectionist measure adopted by any country since the Second World War—and probably in all of history.
Jonathan Dingel sounds skeptical:
All of history? What about periods of autarky?
I'm not sure how you would measure which measures are the "most protectionist," but it would be interesting to see someone try.
Back to Bergsten:
We will also have to get much tougher with some of our foreign partners. The Treasury Department, for example, has never been willing to label China a "currency manipulator" despite its blatant manipulation and the law of the land that directs Treasury to do so and then launch negotiations to remedy the situation. We could take China to the WTO for violating that organization’s proscription (like that of the IMF) of competitive undervaluation and sharply limit its access to our market if the case prevailed. We could initiate "countervailing currency intervention," buying Chinese renminbi to offset the effect on our exchange rate of their massive purchases of dollars.
The last suggestion, "countervailing currency intervention," should probably be avoided at all costs. But it would be fascinating to see it play out!