China says ‘no such thing’ as currency manipulation despite US claim it depreciated yuan exchange rate
- US Treasury declared China a ‘currency manipulator’ on Monday after the yuan fell below the key threshold of 7 to the US dollar for the first time since 2008
- People’s Bank of China says it has ‘refused to engage in a competitive devaluation’ despite the year-long trade war with the United States
China’s central bank flatly rejected the charge from the United States that it is a currency manipulator, instead accusing Washington of adopting protectionist, unilateral actions which run counter to international rules and negatively affect the global economy.
This added a currency war element to the existing bilateral trade and technology conflicts.
“China employs a managed floating exchange rate system that is based on market supply and demand and in reference to a basket of currencies. There is no such thing as currency manipulation [on the part of China],” the People’s Bank of China (PBOC) said in an statement on Tuesday.
“China has refused to engage in a competitive devaluation despite the US escalating trade tensions from 2018, nor has it used [the exchange rate] as a tool to address [the trade conflict].”
The move to allow the yuan to depreciate was justified by economic fundamentals and market sentiment, but analysts said that the decision by the PBOC not to defend the key threshold gave the Trump administration the perfect excuse to extend the bilateral dispute.