Currency Manipulation: China Vs. Hong Kong

The chart above shows monthly ex-rates for China (red line) and Hong Kong (blue line) since 1995. Hong Kong has used a currency board to fix its exchange rate at about 7.8 Hong Kong dollars per USD since the mid-1980s. China was pegging its currency at about 8.3 Yuan per USD from 1995-2005, and now has allowed the Yuan to appreciate (and USD to depreciate) by about 18% to 6.8 Yuan to the USD over the last few years. And yet China frequently gets accused of “currency manipulation” but nobody ever criticizes Hong Kong for manipulating its currency.

What gives? If China had established a Hong Kong-like currency board to peg its rate at 8.3 Yuan/USD, would it have escaped the criticism of manipulating its currency? Should Hong Kong be criticized like China for “currency manipulation?” Are there any special or unique features of Hong Kong’s currency board that differ significantly from China’s policy of pegging the Yuan for many years, such that those differences would absolve Hong Kong of being a “currency manipulator”?

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