After making little headway in talking up the yuan, Beijing has changed tack to talk down the US dollar. Ma Jun, chief economist at a central bank research bureau, said on Thursday the market was “too optimistic” about US president-elect Donald Trump and his policies. He said the greenback’s rise since Trump won the presidential election “does not have much fundamental support” and was mainly due to “changes in market expectations”. China central bank has Trump headache amid US policy flux “Trump’s presidential victory raised speculation of fiscal expansion and fuelled inflationary expectations ... These factors have driven up interest rates in the US and naturally led to capital inflows and a stronger dollar,” Ma said. “In my view ... these expectations are perhaps too optimistic.” Ma said a stronger dollar could hurt US exports, and a jump in US Treasury yields might have greater “tightening effects” on the US economy than the recent two interest rate hikes by the US Federal Reserve. “In addition, Trump’s big tax cut and infrastructure spending plans will not necessarily become reality in the immediate or midterm,” Ma said. “The US dollar will not move in just one direction. The dollar index will adjust once the market corrects the expectations and other currencies will appreciate against the dollar.” Ma comments come as Beijing faces an uphill battle in support the yuan against the dollar. The Chinese currency fallen steadily against the greenback to hit an eight-year low, and it is expected to soon break through the key psychological barrier of 7 yuan to the US dollar. The central bank has tried to highlight the yuan’s stability against a basket of currencies but most investors are still closely watching the yuan-dollar parity. Will Donald Trump make China great again? The central bank’s intervention in the foreign exchange market to defend the yuan has bled the country’s forex reserves. To stem outflows, Beijing has imposed capital account controls banning big overseas investment deals. A foreign exchange official said the foreign exchange regulator was one now getting serious about enforcing existing rules. “It’s like traffic police monitoring drink-driving – drunk driving was always against the law, but the checks were lax before. But now the traffic police are on high alert,” the official said.