China blames US for trade frictions
boao/beijing — China stepped up its attacks on the Trump administration on Monday over billions of dollars worth of threatened tariffs, saying Washington is to blame for trade frictions and repeating it was impossible to negotiate under “current circumstances”.
The comments come after US President Donald Trump on Sunday predicted China would take down its trade barriers, and expressed optimism that both sides could resolve the issue through talks.
Chinese state researchers and media talked down the likely impact of US trade measures on the world’s second largest economy and described the Trump administration’s posturing on trade as the product of an “anxiety disorder”.
“Under the current circumstances, both sides even more cannot have talks on these issues,” Foreign Ministry spokesman Geng Shuang told reporters at a regular news briefing.
“The United States with one hand wields the threat of sanctions, and at the same time says they are willing to talk. I’m not sure who the United States is putting on this act for,” Geng said.
The trade frictions were “entirely at the provocation of the United States”, he added.
Beijing did not want to fight a trade war, but was not afraid of
The United States with one hand wields the threat of sanctions, and at the same time says they are willing to talk. I’m not sure who the United States is putting on this act for Geng Shuang, spokesman of China’s Foreign Ministry
one, Vice Commerce Minister Qian Keming said at the Boao Forum for Asia in the southern province of Hainan.
The focus this week will be on the forum, with President Xi Jinping and International Monetary Fund Managing Director Christine Lagarde delivering speeches on Tuesday.
After repeated pledges by Beijing to open up sectors such as financial services have yielded little substantial progress, Trump has said that the United States will no longer let China take advantage of it on trade.
On Monday morning in Washington Trump tweeted that China puts 25 per cent tariffs on cars imported from the United States, while cars it imports from China face 2.5 per cent duties.
“Does that sound like free or fair trade. No, it sounds like STUPID TRADE,” Trump said in his post. —
beijing — China is evaluating the potential impact of a gradual yuan depreciation, people familiar with the matter said, as the country’s leaders weigh their options in a trade spat with US President Donald Trump that has roiled financial markets worldwide.
Senior Chinese officials are studying a two-pronged analysis of the yuan that was prepared by the government, the people said. One part looks at the effect of using the currency as a tool in trade negotiations with the US, while a second part examines what would happen if China depreciates the yuan to offset the impact of any trade deal that curbs exports.
The analysis doesn’t mean officials will carry out a devaluation, which would require approval from top leaders, the people said, asking not to be named as the information is private. The yuan weakened as much as 0.2 per cent to 6.3186 per dollar in onshore trading on Monday before trading little changed as of 5:49pm local time. China’s central bank didn’t immediately respond to a faxed request for comment.
“It seems as if Beijing is showing the full extent of policies they could deploy in response to Trump’s protectionist rampage,” said Viraj Patel, a strategist at ING Bank in London.
While Trump regularly bashed China on the campaign trail for keeping its currency artificially weak, the yuan has gained about 9 per cent against the greenback since he took office and has been steady in recent weeks despite the escalation of trade tensions between the world’s two largest economies. The Chinese currency touched the strongest level since August 2015 last month.
Other markets have been far more turbulent as both the US and China proposed tariffs on $50 billion of goods and Trump instructed his administration to consider levies on an additional $100 billion of Chinese products.
The S&P 500 Index has slumped more than 9 per cent from this year’s peak in January, while the Shanghai Composite Index has lost 12 per cent on concern that tensions between America and China could devolve into a full-blown trade war. Yields on US Treasuries have also declined from this year’s highs as investors shifted into haven assets.
While a weaker yuan could help President Xi Jinping shore up China’s export industries in the event of widespread tariffs in the US, a devaluation comes with plenty of risks. It would encourage Trump to follow through on his threat to brand China a currency manipulator, make it more difficult for Chinese companies to service their mountain of offshore debt, and undermine recent efforts by the government to move toward a more market-oriented exchange rate system.
It would also expose China to the risk of local financial-market volatility, something authorities have worked hard to subdue in recent years. When China unexpectedly devalued the yuan by about 2 per cent in August 2015, the move sent shock-waves through global markets.
“Is it in their interest to devalue yuan? It’s probably unwise,” said Kevin Lai, chief economist for Asia ex-Japan at Daiwa Capital Markets
It seems as if Beijing is showing the full extent of policies they could deploy in response to Trump’s protectionist rampage Viraj Patel, strategist at ING Bank
Hong Kong Ltd. “Because if they use devaluation as a weapon, it could hurt China more than the US The currency stability has helped to create a macro stability. If that’s gone, it could destabilise markets, and things would look like 2015 again.”
Given the downsides, China is unlikely to resort to a devaluation unless it exhausts its other trade-negotiation tools, said Frances Cheung, head of Asia macro strategy at Westpac Banking Corp. in Singapore. The more likely scenario is that the two countries will reach a compromise and China will continue to liberalise its capital account, added Zhou Hao, senior Asia emerging markets economist at Commerzbank.
“There are many measures they can take before resorting to this tool,” said Ken Peng, an investment strategist at Citi Private Bank in Hong Kong. “Using yuan depreciation is like sacrificing 800 soldiers of your own to kill just 1,000 enemies.”
Still, that doesn’t mean marketdriven yuan weakness is off the table. The average forecast among analysts tracked by Bloomberg calls for the currency to drop slightly by year-end to 6.38 per dollar. China limits daily fluctuations in the yuan to 2 per cent on either side of a reference rate set by the central bank.