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U.S. NEWS Tuesday 6 augusT 2019

U.S. Treasury Department labels China a currency manipulator

By PAUL WISEMAN and apparent logic for Trea-
MARTIN CRUTSINGER sury’s designation of China
AP Economics Writers as a currency manipulator
WASHINGTON (AP) — The reeks of arbitrariness and
U.S. Treasury Department retaliation, and will inflict
labeled China a currency further damage on an al-
manipulator Monday after ready wounded relation-
Beijing pushed down the ship between China and
value of its yuan in a dra- the U.S.”
matic escalation of the During the 2016 presiden-
trade conflict between the tial campaign, Trump had
world’s two biggest econo- accused China of manipu-
mies. lating its currency to gain
The decision, which came trade advantages against
hours after President Don- the United States and had
ald Trump accused China promised to brand China In this June 10, 2019, file photo, a man walks past a money exchange shop decorated with
of unfairly devaluing its cur- a currency manipulator as different banknotes at Central, a business district of Hong Kong.
rency, marks a reversal for soon as he took office. Associated Press
Treasury: In May, it had de- However, Trump’s Treasury Trump administration views “trade protectionism” — For more than a year,
clined to sanction China for Department, which issues China’s currency policy this an apparent reference to the U.S. and China have
manipulating its currency. a report on currency ma- way: “Any move is a move Trump’s threat last Thursday been locked in a trade
The U.S. had not put China nipulation every six months, they want. Therefore, a to impose tariffs Sept. 1 on war over allegations that
on the currency blacklist has issued five reports since move down is a manipula- the $300 billion in Chinese Beijing steals trade se-
since 1994. Trump took office, the most tion.” imports to the United States crets and pressures foreign
The designation could recent in May, in which China’s central bank in addition to the $250 bil- companies to hand over
pave the way for more U.S. Treasury said China did blamed the yuan’s drop on lion he’s already targeted. technology.q
sanctions against China. not meet the criteria to be
Earlier Monday, China labeled a currency ma-
had allowed its currency nipulator. The Treasury an-
to weaken to an 11-year nouncement, which came
low, a move that gives its late Monday after the U.S.
exporters a price edge in stock market had suffered
world markets and eases its worst day this year, pro-
some of the damage from vided few details on the
U.S. tariffs on Chinese prod- reasons for the abrupt
ucts. Trump had gone on change.
Twitter to denounce Chi- The statement did say that
na’s move as “currency China’s explanations for
manipulation.” He added, its recent currency moves
“This is a major violation were implausible and
which will greatly weaken “confirm that the purpose
China over time.” of China’s currency de-
In a statement, Treasury valuation is to gain unfair
said it would work with the competitive advantage in
International Monetary international trade.”
Fund “to eliminate the un- China’s central bank sets
fair competitive advan- the exchange rate each
tage created by China’s morning and allows the
latest actions.” yuan to fluctuate by 2%
The move was unexpect- against the dollar during
ed. “This is an extraordinary the day. The central bank
action of hostility against can buy or sell currency —
a major trading partner, or order commercial banks
with little economic basis to do so — to dampen
and again driven mostly by price movements.
presidential whims,” said Because the Chinese gov-
Cornell University econo- ernment sets the exchange
mist Eswar Prasad, former rate, said Joseph Gagnon,
head of the China division senior fellow at the Pe-
at the International Mone- terson Institute for Inter-
tary Fund. “The timing and national Economics, the