China's exchange rate is fixed to the dollar, leading to high productivity growth and a large trade surplus. Some believe the renminbi is undervalued and should be appreciated to reduce the surplus. However, an appreciation of the renminbi could cause deflation in China. By looking at international adjustment between China and the United States from asset and labor market perspectives, the researchers found that an appreciation of the renminbi may not necessarily reduce China's trade surplus, drawing comparisons to Japan's unsuccessful yen appreciation.