Macroscope | China’s move to prop up the yuan is a smart strategy to defuse trade tensions with the US
Neal Kimberley lauds the timing of the PBOC’s move to support the renminbi’s value, which came on the heels of renewed US accusations of currency manipulation and at the end of the latest round of China-US talks
It was a well-timed and strategically useful announcement.
As yuan weakness works against US export competitiveness and provides China with some protection from the impact of US tariffs, it can easily be characterised by the White House as currency manipulation, although in reality Washington does tend to apply a double standard on the issue.
The PBOC’s re-application of the counter-cyclical factor should play well in Washington when, as now, the adjustment lends itself to a firmer yuan than otherwise might have been seen, even if the re-application is clearly a form of interference in the free-market pricing of the Chinese currency.
