China won’t weaken yuan to boost exports

tianjin — China will not stoop to competitive devaluation of its currency, Premier Li Keqiang stressed, hours after China hit back, with a softer punch than the one landed by the United States, in an escalating tariff war between the world’s largest economies.

Addressing a World Economic Forum event in the port city of Tianjin on Wednesday, Li did not directly mention the trade conflict but said talk of Beijing deliberately weakening its currency was “groundless.”

“One-way depreciation of the yuan brings more harm than benefits for China,” he said. “China will never go down the road of relying on yuan depreciation to stimulate exports.” China will not do that to chase “thin profits” and “a few small bucks”.

Li went on to say that the world’s multi-lateral trading system should be upheld, and that unilateral trade actions will not solve any problems.

His remarks gave a lift to the yuan, which has lost about nine per cent of its value since mid-April amid the ongoing trade war.

On Tuesday, Beijing added $60 billion of US products to its import tariff list in retaliation for US President Donald Trump’s planned levies on $200 billion of Chinese goods.

But Beijing is running out of room to respond to any further US tariffs on a dollar-for-dollar basis, raising concerns it may resort to other measures to weather what could be a protracted trade battle.

China has yet to publicly accept an invitation extended last week by US Treasury Secretary Steven Mnuchin to hold a fresh round of talks.