|  I Think the Matter is A Bit More Complicated Than That
One concern about revaluation of the Yuan is that Chinese goods would no longer be competitive in the export market.
But China in the last few decades has built up an impressive array of manufacturing technologies and efficiencies, and supply chains, that together give China very big price advantages over the closest competitors. In quite a number of industries the price advantage is as big as 30-40%. I have always said that the Chinese manufacturers are leaving too much on the table. Yes, cut throat competition can continue to put downward price pressures on exports, and it is getting more and more difficult for the manufacturers to make profits.
Therein lies the opportunity for the government to provide strategic help, by providing the resources to strategically study industries, and on export price reforms (which can be backed with a litany of tools such as export tariffs, export quotas, and even currency reevaluations), geared towards maximizing profits for the nation as a whole, in the export growth. Merely having top line growth is inane. China needs to have PROFITABLE exports.
In all industries in which China has a significant position, either on the supply or the demand side, the government should take steps to form cooperative cartels with other major players, in order to gain the maximum advantage. Watch how the ore exporting countries ganged up to rob China of billions in the last couple of years. If an import cartel can be formed with Japan and Korea, terms would be much more favorable.
For another example, rare earth exports should have been strictly controlled years ago, as China accounts for 70% of world production already. Prices should literally be twice or three times what they are today.
For those industries in which pricing is truly competitive and in which a few percentage points matter (e.g., low end textiles), there can be industrial policy and subsidies (direct or indirect) to counter the effect of an up valuation.
With such strategic planning, a up valuation of the Yuan would actually lower China's import costs, and bring in more profits in foreign trade. There simply is no reason to be selling at 30-40% lower than the competitor. A 7-10% price advantage would be more than enough.
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