BREAKING: U.S. Treasury declares China a currency manipulator https://t.co/v08U5QY3p4
https://twitter.com/axios/status/1158497366397345793
U.S. Treasury Secretary Steven Mnuchin on Monday night declared China to be a currency manipulator, just hours after the Chinese government allowed the yuan to slip below a 7-to-1 dollar ratio for the first time in over a decade.
Why it matters: This is a further ratcheting up of trade tensions between the two countries.
How it works: Under a 2015 law, in order to be a currency manipulator, a country needs to spend 2% of GDP on currency manipulation over a 12-month period. China is not doing this. If anything, China was keeping the yuan artificially strong until Trump ratcheted up the trade war on Thursday.
Why now: Trump campaigned on labeling China a currency manipulator, but was persuaded not to on the grounds that it would not be helpful. Today, however, voices from both the right (Lou Dobbs) and left (Chuck Schumer) have been urging the president to take this step.
What’s next: The currency-manipulator designation does not come with particularly harsh remedies. First comes a year of negotiations, and after that even the Trump administration's proposed beefed-up penalties are small, amounting to no more than about $20 million per year. The move will certainly annoy the Chinese, however, and make any trade deal harder to achieve.
Treasury Designates China as a Currency Manipulator | U.S. Department of the Treasury
https://home.treasury.gov/news/press-releases/sm751
As noted in the most recent Report to Congress on the Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States (“FX Report”), China has a long history of facilitating an undervalued currency through protracted, large-scale intervention in the foreign exchange market. In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past. The context of these actions and the implausibility of China’s market stability rationale confirm that the purpose of China’s currency devaluation is to gain an unfair competitive advantage in international trade.
美国财政部宣布中国为汇率操纵国
The Chinese authorities have acknowledged that they have ample control over the RMB exchange rate. In a statement today, the People’s Bank of China (PBOC) noted that it “has accumulated rich experience and policy tools, and will continue to innovate and enrich the control toolbox, and take necessary and targeted measures against the positive feedback behavior that may occur in the foreign exchange market.” This is an open acknowledgement by the PBOC that it has extensive experience manipulating its currency and remains prepared to do so on an ongoing basis.
https://twitter.com/axios/status/1158497366397345793
U.S. Treasury Secretary Steven Mnuchin on Monday night declared China to be a currency manipulator, just hours after the Chinese government allowed the yuan to slip below a 7-to-1 dollar ratio for the first time in over a decade.
Why it matters: This is a further ratcheting up of trade tensions between the two countries.
How it works: Under a 2015 law, in order to be a currency manipulator, a country needs to spend 2% of GDP on currency manipulation over a 12-month period. China is not doing this. If anything, China was keeping the yuan artificially strong until Trump ratcheted up the trade war on Thursday.
Why now: Trump campaigned on labeling China a currency manipulator, but was persuaded not to on the grounds that it would not be helpful. Today, however, voices from both the right (Lou Dobbs) and left (Chuck Schumer) have been urging the president to take this step.
What’s next: The currency-manipulator designation does not come with particularly harsh remedies. First comes a year of negotiations, and after that even the Trump administration's proposed beefed-up penalties are small, amounting to no more than about $20 million per year. The move will certainly annoy the Chinese, however, and make any trade deal harder to achieve.
Treasury Designates China as a Currency Manipulator | U.S. Department of the Treasury
https://home.treasury.gov/news/press-releases/sm751
As noted in the most recent Report to Congress on the Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States (“FX Report”), China has a long history of facilitating an undervalued currency through protracted, large-scale intervention in the foreign exchange market. In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past. The context of these actions and the implausibility of China’s market stability rationale confirm that the purpose of China’s currency devaluation is to gain an unfair competitive advantage in international trade.
美国财政部宣布中国为汇率操纵国
The Chinese authorities have acknowledged that they have ample control over the RMB exchange rate. In a statement today, the People’s Bank of China (PBOC) noted that it “has accumulated rich experience and policy tools, and will continue to innovate and enrich the control toolbox, and take necessary and targeted measures against the positive feedback behavior that may occur in the foreign exchange market.” This is an open acknowledgement by the PBOC that it has extensive experience manipulating its currency and remains prepared to do so on an ongoing basis.
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