Macroscope | On China’s ‘currency manipulation’, the US should be careful what it wishes for
Neal Kimberley says by squarely blaming Beijing for the weakness of the yuan and insisting it follows a ‘market-determined currency regime’, the US may have misread the likely consequences of China loosening its grip and shedding its capital controls
The more the United States sets out its differences with China over trade, the harder it is to see an easy resolution. The renminbi is a case in point. Washington clearly wishes to limit the potential for yuan depreciation, given that it bolsters China’s competitive position, even though in the past the United States hasn’t been averse to talking down the US dollar on occasion.
“We’re going to make sure that whatever we make up on trade, we don’t lose on currencies,” Mnuchin said, “and if you look at the US-Mexico-Canada deal, for the first time, we put a currency provision into the agreement and that’s something that’s going to be important going forward for trade negotiations.”
On Saturday, Mnuchin reiterated that, “the currency issue is an important issue for us in trade and will be part of our trade discussions. We want to make sure that depreciation is not being used for competitive purposes in trade.”