According to Barron's, the RMB is "way overvalued" (Barrons):
Indeed, the yuan is overvalued, as shown by capital flight totaling upwards of $1 trillion last year. Rich Chinese are voting with their pocketbooks to get their money out of the country, buying up property in Canada and the U.S. Chinese businesses also are striving to repay dollar loans before the greenback becomes dearer. And China corporations are seeking to acquire foreign properties, exemplified by Anbang’s attempt to buy Starwood Hotels & Resorts (ticker: HOT ), the operator of the Sheraton and Westin hotels, for $14 billion.Interesting times ahead...
Goldman points out that the real effective exchange rate of the yuan (which takes into account China’s trade and differences in inflation with its trading partners) is twice as high as two decades ago and 40% higher than it was in 2008. The latter rise is largely because the trade-weighted dollar rose by 25% since early 2014, when the Federal Reserve said it would end its quantitative easing policy. After China’s currency moved up in the wake of the dollar, Beijing let it ease slightly last summer.
But China’s previous refusal to let its currency fall against the greenback had two, deleterious effects on that nation’s economy. It forced the People’s Bank of China to impose the highest real interest rates in the world to prop up the yuan. That, in turn, throttled back exports, especially those to the U.S.
More here: "The more circuitous the routes to propping up its currency, the less conviction investors may have in its stability." (WSJ)