Japan may seize chance to slash yen as Trump homes in on yuan
Gambling on new US administration’s need for strong Japan ties, Abe could crank up yen output even if this in turn weakens yuan
If United States president-elect Donald Trump’s appointment of Peter Navarro to head a new Council of Trade is the prelude to strained relations between Beijing and Washington, the United States will not wish to alienate Japan at the same time.
Japanese economic policies that might ordinarily raise US eyebrows could instead pass unchallenged. The yen could fall further in value.
If Japan’s policies do prompt a renewed dive in the value of the yen, Beijing might decide that justifies a further fall in the yuan. In turn, while such an outcome would irk the Trump administration, it could, of course, be used as a pretext to justify imposing tariffs on imports from China.
At the very least, with Navarro’s literary output including books such as Death by China, his appointment surely prefigures a more muscular approach to Sino-US trade relations under a Trump presidency.
Already the current Obama administration and indeed the Japanese government have opted to decline official market economy status to China despite the fact that, in Beijing’s view, that categorisation should have been conferred on December 11, the 15th anniversary of China’s original accession to the World Trade Organisation.