China Is Not Manipulating Its Currency for a Trade Advantage, Former US Treasury Secretary Says

2017-03-30

(Yicai Global) March 30 -- China is not manipulating the yuan’s exchange rates for a trade advantage, said Jacob Lew, a former Treasury secretary who served during the Obama administration, at an event in New York.

Currency issues are not likely to be a focal point in bilateral relations, Bloomberg quoted Lew as saying while talking about a report on foreign currency evaluation scheduled for release by the US Treasury Department in April.

The report’s most critical portion contains three criteria to assess whether a foreign country has conducted unfair behaviors. A country that has a trade surplus with the US of more than USD20 billion, has a current account surplus exceeding 3 percent of its gross domestic product and has made persistent purchases of foreign assets worth 2 percent of its GDP to weaken its currency will be labeled a manipulator.

The third criterion, intentional devaluing, is the most important. China has done the opposite in the past year and has taken measures to bolster its currency, Lew noted.

There is no evidence that any of the US’s major trading partners meet the definition of a currency manipulator, and China is trying to support the yuan to prevent its rapid depreciation from hurting the global economy, the US Treasury Department said on Oct. 14, 2016 in the Foreign Exchange Policies of Major Trading Partners of the United States report.

Trump told Reuters last month that although he did not label China a currency manipulator on his first day in office as he had pledged to do earlier, he has not held back.

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