United States Brands China A Currency Manipulator, Escalates Trade Dispute

100 yuan notesIT IS A quarter of a century since the United States branded China as a currency manipulator. President Bill Clinton did so in 1994. Now President Donald Trump has followed suit.

The unexpected move marks an escalation in the bilateral trade dispute. As the Reuters news agency notes:

The announcement came hours after China let the yuan break through the key 7-per-dollar level for the first time in more than a decade, in a sign Beijing might be willing to tolerate more currency weakness as Washington threatens to impose more tariffs on Chinese goods from Sept. 1.

The decision will have more symbolic than practical impact. The sanction for currency manipulation is tariffs, which are already being applied. The US Treasury is now required to hold special talks with China, but broader talks over trade and technology are already in train.

If there is a new element, it is that the US Treasury will consult with the International Monetary Fund, dragging that institution into the bilateral dispute. Just three weeks ago, the Fund declared the yuan to be in line with China’s economic fundamentals and the US dollar to be overvalued by up to 12%. Awkward.

2 Comments

Filed under China-U.S., Economy

2 responses to “United States Brands China A Currency Manipulator, Escalates Trade Dispute

  1. Pingback: IMF, China And The Economic Elephant In The Room | China Bystander

  2. Pingback: Trump Lets Huawei Buy US Tech For Another 90 Days | China Bystander

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s