China rejects Trump's 'champion of currency manipulation' remarks

The Dollar Business Bureau

Days after US President Donald Trump accused China of being the “grand champion” of currency manipulation, Beijing on Friday hit back at Trump saying it has “no intention of deliberately devaluing its currency to gain a trade advantage”.   

“If you must pin the label of ‘grand champion’ … on China, then we are a grand champion of economic development. We’ve made great achievements since the start of economic reform and opening-up, making us the undisputed grand champion,” Beijing’s foreign ministry spokesperson, Geng Shuang, said to the Guardian in response to Trump’s remarks of currency manipulation.

Earlier Trump had said: “I think they’re grand champions at manipulation of currency. So I haven’t held back. We’ll see what happens.”

The US-China relations had been on a downward trend since the ascension of Trump as the United States President. Trump has continued to attack China over trade, North Korea, Taiwan and the South China Sea, thereby generating uncertainty and turbulence between the world’s two largest economies.

The relations were expected to improve after the US President and his Chinese counterpart, Xi Jinping, held telephone conversation earlier this month, during which Trump committed to support Beijing’s One China Policy. In the past, Trump had also accused Japan and South Korea of manipulating their currencies.  

While Chinese scholars seemed unhappy at Trump’s allegation, several economists in and outside China also rejected Trump’s claim of willingly bringing down the value of the yuan, with an aim to encourage its own exporters and crippling US manufacturers.

“The logic of Trump’s claim is that he believes other countries keep their currencies artificially cheap to increase their exports to the US. [But] as a matter of fact, the Chinese yuan has seen a 13% devaluation since last year,” Zhu said.

A Peking University finance professor, Christopher Balding, said: “China is clearly manipulating its currency, there are no two ways about it. But at this point, they are essentially propping up the value of their currency rather than manipulating it lower to gain an unfair trade advantage.

“To some degree, Trump is correct, that of any major economy they probably are the grand champions of currency manipulation,” he added.

China’s central bank has spent billions in foreign exchange reserves, shooting up its currency to counter capital outflows.