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https://scmp.com/news/china/article/3026442/steven-mnuchin-says-currency-will-be-focus-next-round-china-talks China
Steven Mnuchin says currency will be a focus of next round of China talks
- US treasury secretary says he expects governor of People’s Bank of China to be in Washington for negotiations in October
- Treasury Department took rare step of designating China as a currency manipulator in August amid trade war escalation
US Treasury Secretary Steve Mnuchin speaks to reporters outside the White House on Monday. Photo: Reuters
This story is published in a content partnership with POLITICO. It was originally reported by Adam Behsudi on politico.com on September 9, 2019.
US Treasury Secretary Steven Mnuchin said China’s currency practices will be a topic of conversation when high-level officials from Beijing arrive in Washington early next month for another round of trade talks.
“I expect the governor of the People’s Bank of China to come over for these talks,” Mnuchin told reporters on Monday. “So part of the conversations we will be having with them is around currency and currency manipulation.”
The Treasury Department took the rare step last month of designating China a currency manipulator after it accused Beijing of intentionally devaluing the renminbi. Beijing has often been accused of decreasing the value of its currency to make its goods cheaper and gain an export advantage.
The decision to designate China as a currency manipulator came after the People’s Bank let the value of the currency fall to its lowest value in a decade. The US will now “engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions”, the Treasury said last month.
The IMF, however, in an annual review of Beijing‘s economic policies released after the US action, said China’s currency “was broadly stable” over the past year.
US President Donald Trump and members of his administration have largely based their argument that China is paying for US tariffs – as opposed to American importers – on evidence that China has allowed its currency's value to fall to offset the penalties.
“If the RMB depreciates 15 per cent and you put on a 15 per cent tariff, that means that US companies can buy in dollars items 15 per cent cheaper. So the fact that they buy things 15 per cent cheaper means that China is indeed paying for the tariff,” Mnuchin said. “It really is simple math with depreciation of the RMB.”