The US Treasury Department has labelled China a currency manipulator after Beijing pushed down the value of its yuan in a dramatic escalation of the trade conflict between the world’s two biggest economies.
The decision, which came hours after President Donald Trump accused China of unfairly devaluing its currency, marks a reversal for the Treasury. In May, it declined to sanction China for manipulating its currency.
The US has not put China on the currency blacklist since 1994.
The designation could pave the way for more sanctions against China.
….used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices. Not anymore!
— Donald J. Trump (@realDonaldTrump) August 5, 2019
Earlier on Monday, China allowed its currency to weaken to an 11-year low, giving its exporters a price edge in world markets and easing some of the damage from US tariffs on Chinese products.
In a statement, the Treasury said it would work with the International Monetary Fund “to eliminate the unfair competitive advantage created by China’s latest actions”.
Mr Trump had gone on Twitter to denounce China’s move as “currency manipulation”, adding: “This is a major violation which will greatly weaken China over time.”
China’s central bank sets the exchange rate each morning and allows the yuan to fluctuate by 2% against the dollar during the day. The central bank can buy or sell currency — or order commercial banks to do so — to dampen price movements.
China’s central bank blamed the yuan’s drop on “trade protectionism” — an apparent reference to Mr Trump’s threat last Thursday to impose tariffs on September 1 on 300 billion dollars (£247 billion) in Chinese imports to the US in addition to the 250 billion dollars (£205 billion) he has already targeted.
For more than a year, the US and China have been locked in a trade war over allegations that Beijing steals trade secrets and pressures foreign companies to hand over technology.
