Americans often blame China for their current economic woes, including large trade deficits and slow job growth, and believe China manipulates exchange rates to keep its currency artificially low. Edward Lazear, the former U.S. Council of Economic Advisors chairman, disproved this theory earlier this week.

Lazear wrote in a Wall Street Journal article that the U.S. trade deficit with China results from a trade imbalance, in which Chinese exports to the United States increased at a rate of 18.2% between 2005 and 2008. During this time, the Renminbi appreciated nearly 2.1% against the dollar.

Lazear, a professor at Stanford University in California, claimed that a drop-off in Chinese exports took place between 2008 and 2010, after the financial crisis, at a time when the exchange rate between the two countries' currencies remained stable.

He also believed that the growing trade volume between China and other countries have stimulated an increase in its economic aggregate, making China a hub for import and export activities. Therefore, China's exchange rate policy is not the principal driving force in raising export volumes.

The United States should examine its own weak domestic economic policies and stop faulting the Renminbi, stressed Lazear.

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