US removes China as currency manipulator ahead of deal
Washington, US - The Trump administration on Monday lifted its designation of China as a currency cheat, saying the nation has made ‘enforceable commitments’ not to devalue the yuan and has agreed to publish exchange-rate information.
The change in the US stance was outlined in the US Treasury Department’s semi-annual foreign-exchange report to Congress. The document was released two days before America and China are set to sign a phase-one trade agreement in the White House, according to people familiar with the plans.
The document listed no major US trading partner as a currency manipulator among the 20 economies it monitors for potential manipulation. Switzerland was added to the monitoring list, while China, Japan, Korea, Germany, Italy, Ireland, Singapore, Malaysia, Vietnam remained. “China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability,“Treasury Secretary Steven Mnuchin said in a statement released in Washington.
The Asian nation’s commitment was made as part of the first phase of a US-China trade deal, according to the 45-page report. The US and China have been negotiating since the August 5 designation on China, which came in response to what the US Treasury said was Beijing’s ‘concrete steps to devalue its currency’.
“China has never been a currency manipulator and the US’ latest conclusion is in line with the truth and international consensus,” Chinese foreign ministry spokesman Geng Shuang told reporters in Beijing on Tuesday. “China will continue to deepen the currency market reform, improve the currency system and keep the rate basically stable at an equilibrium level.”
The designation in August further escalated the trade war with Beijing after the country’s central bank allowed the yuan to fall in retaliation to new US tariffs.
The report urges China to ‘increase public understanding’ between the People’s Bank of China (PBOC) and the ‘foreignexchange activities of the stateowned banks, including in the offshore RMB market’. Treasury said PBOC ‘appears to have largely refrained’ from intervention in 2019.
Designation as a currency manipulator comes with no immediate penalties but can rattle financial markets. Currency policy has emerged as Trump’s latest tool to rewrite global trade rules that he says have hurt American businesses and consumers. He has made foreignexchange policy a key piece of trade deals with Mexico, Canada, South Korea and China.
With China on the verge of signing a deal with Trump to at least temporarily defuse a nearly two-year trade war, Xi Jinping is projecting confidence.
After he warned last year about threats to the Communist Party’s rule and ‘changes unseen in 100 years,’ Xi began 2020 touting ‘extraordinary Chinese splendour and Chinese strength’. “In the face of severe and complex domestic and foreign situations and various risks and challenges, we have been able to move forward firmly,” the Chinese President told party leaders last week.
Problems and challenges remain for Xi, but the phase-one deal the world’s biggest economies plan to sign on Wednesday in Washington gives him reason to accentuate the positive.
A file photo shows US president Donald Trump and Chinese president Xi Jinping