My AEI colleague Desmond Lachman offers some thoughts on China’s currency devaluation:

Yesterday’s surprise 2 percent Chinese currency devaluation is bound to raise charges in Congress that China is a serial currency manipulator. Never mind the context in which that devaluation occurred and the sharp appreciation of the Chinese currency that preceded it. Never mind, as well, that other economies — including the United States, Europe and Japan — have all responded in recent years to a weakening in their economies with an unprecedented degree of monetary policy easing. And that easing has had the effect of weakening their currencies by a large multiple of China’s 2 percent devaluation.

His bottom line: “…we could be drifting toward a world of currency wars that could seriously undermine the global trading system to everyone’s disadvantage.”

Read his entire essay here.