Sino File | What Trump really gains by calling China a currency manipulator
- China fails to meet two of the three criteria set by the US Treasury to identify currency manipulators
- So exactly who is manipulating who?
The Trump administration’s designation of China as a currency manipulator may be more a symbolic move than a substantive one, but it is yet another step in the escalation of conflict between the world’s sole superpower and its biggest, fastest-rising competitor.
The US Treasury Department’s decision came on August 5, the day the yuan dropped past the psychologically significant value of seven to the dollar for the first time in over a decade.
The currency manipulator label did not warrant any immediate action, but requires Washington to have “enhanced engagement” with Beijing. However, both sides have engaged in trade negotiations – which have also covered currency issues – for two years without reaching any agreement. On top of this, the escalation of conflict would only increase the chance of a suspension in the China-US talks scheduled for September and thus further reduce the chance of a near-term trade deal.
When announcing the designation, the Treasury said China had “a long history of facilitating an undervalued currency” and had taken “concrete steps to devalue its currency” in recent days to gain an unfair advantage.