Trump tweet tar­get­ing China rapidly re­but­ted

China Daily - - TOP NEWS - By CHEN WEIHUA in Wash­ing­ton chen­wei­hua@chi­nadai­

A tweet by US Pres­i­dent Don­ald Trump blam­ing China and Rus­sia for cur­rency ma­nip­u­la­tion was quickly con­tested on Mon­day.

Trump tweeted early Mon­day that “Rus­sia and China are play­ing the Cur­rency De­val­u­a­tion game as the U.S. keeps rais­ing in­ter­est rates. Not ac­cept­able!”

His words came three days af­ter the US Trea­sury Depart­ment’s semi­an­nual re­port to Congress on Fri­day that China and five other ma­jor US trad­ing part­ners placed un­der mon­i­tor­ing — Ger­many, Japan, South Korea, Switzer­land and In­dia — were not ma­nip­u­lat­ing their cur­ren­cies.

“This tweet re­flects a mis­un­der­stand­ing of cur­rency is­sues. China’s cur­rency has ap­pre­ci­ated sig­nif­i­cantly against the US dol­lar since Trump took of­fice, which should in prin­ci­ple make US ex­ports more com­pet­i­tive in the Chi­nese mar­ket,” said Eswar Prasad, a se­nior fel­low at the Brook­ings In­sti­tu­tion and for­mer In­ter­na­tional Mone­tary Fund China divi­sion chief.

Prasad told China Daily that there is lit­tle ev­i­dence that China is in­ter­ven­ing sub­stan­tially in for­eign ex­change mar­kets to pre­vent its cur­rency from ap­pre­ci­at­ing fur­ther against the dol­lar.

“In­vok­ing cur­rency de­val­u­a­tion in the con­text of the es­ca­lat­ing US trade dis­pute with China is not con­sis­tent at this stage with the facts on the ground,” said Prasad, au­thor of the re­cent books Gain­ing Cur­rency: The Rise of the Ren­minbi and Dol­lar Trap: How the US Dol­lar Tight­ened Its Grip on Global Fi­nance.

Nicholas Burns, a for­mer US un­der­sec­re­tary of state for po­lit­i­cal af­fairs, de­scribed Trump’s words as “the real dan­ger and risk of Twit­ter diplo­macy by the pres­i­dent when he fires off the tweet with­out hav­ing talked to his ad­vis­ers and with­out hav­ing con­firmed the facts”.

“The Trea­sury re­port last week did not brand China a cur­rency ma­nip­u­la­tor. Now the pres­i­dent does. So it makes us look a lit­tle bit un­sta­ble and un­steady,” he said on CNBC on Mon­day.

He said any pres­i­dent’s words are “sacro­sanct” and have to have cred­i­bil­ity. “This re­duces our pres­i­dent’s, our coun­try’s, cred­i­bil­ity when he says things that are not ac­cu­rate,” said Burns, now a pro­fes­sor at Har­vard’s Kennedy School.

Trump had re­peat­edly ac­cused China of cur­rency ma­nip­u­la­tion dur­ing his 2016 pres­i­den­tial cam­paign. But three re­ports is­sued by the Trea­sury un­der Trump did not find that China had ma­nip­u­lated its cur­rency.

On the con­trary, the US dol­lar has weak­ened sub­stan­tially in the past year against most cur­ren­cies, in­clud­ing the ren­minbi.

The yuan has gained about 10 per­cent against the US dol­lar in the past 12 months and climbed in March to its strong­est level since Au­gust 2015, ac­cord­ing to Bloomberg News.

Yi Gang, gover­nor of the Peo­ple’s Bank of China, the cen­tral bank, said on April 11 that China has no in­ten­tion of ma­nip­u­lat­ing its ex­change rate to try to boost trade.

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