Business

US to reverse China ‘currency manipulator’ label

A Chinese bank employee counts 100-yuan notes and US dollar bills at a bank counter in Nantong in China's eastern Jiangsu province on August 28, 2019.Image copyright STR/Getty

The US will reverse its decision to brand China a currency manipulator as the countries work toward a trade deal.

The US Treasury Department is expected to announce the decision on Monday.

Washington and Beijing will this week sign “phase one” of a trade deal aimed reducing friction between the world’s two largest economies.

The US and China have been involved in a tit-for-tat trade war since 2018, with both imposing tariffs on billions of dollars of each other’s goods.

The reversal of the “currency manipulator” label will help ease tensions between Beijing and Washington.

President Donald Trump has repeatedly accused China of allowing the value of the yuan to fall, making Chinese goods cheaper.

The US listed China as a currency manipulator in August after China pledged to retaliate against Mr Trump’s threat to put a 10% tariff on $300bn (£246.7bn) of Chinese imports.

At the time, China blamed the weakening of its currency on the market, suggesting investors were concerned about the escalating trade war between the two countries.

Trade tensions

Under the US definition, currency manipulation is the deliberate effort by a country to influence the exchange rates between its currency and the US dollar to gain an “unfair competitive advantage in international trade”.

Mr Trump, who blames China for a decline in US manufacturing, promised to label China a manipulator during his 2016 election campaign.

But after he took office, he appeared to soften his tone. The US Treasury did not apply the designation in the regular reports it publishes about currency movements.

But eventually, the move was made in a statement by Treasury Secretary Steven Mnuchin amid heightened trade tensions between Beijing and Washington last summer. It was the first time the US had officially branded a country a currency manipulator since 1994.

https://www.bbc.co.uk/news/business-51098294

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