Xi Jinping seeks to ease currency war fears as China and US near trade deal
- Chinese president says country ‘will not engage in any beggar-thy-neighbour’ devaluation
- Market will be allowed to play ‘decisive’ role in setting yuan exchange rate, while keeping it ‘basically stable’
President Xi Jinping on Friday said China would avoid any form of “beggar-thy-neighbour” currency devaluation, suggesting Beijing does not intend to use the currency as a trade weapon and pushing up the yuan in the foreign exchange market.
In his keynote speech at the Belt and Road Forum in Beijing on Friday, Xi said China would allow the market to play a “decisive” role in setting the yuan exchange rate while keeping the rate “basically stable”, in response to allegations the country has manipulated the value of its currency to seek advantages in trade.
“China will not engage in any beggar-thy-neighbour currency devaluation,” the president said.
The promise came as Beijing and Washington are entering the final stage of their trade deal negotiations, with the yuan exchange rate reportedly part of that pact.
But there are public concerns in China, and among some researchers, that Beijing is signing a currency deal similar to the Plaza Accord of 1985 – an agreement between the United States, Japan, West Germany, France and Britain that led to an asset bubble and lost decades for Japan’s economy.