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28 Sep 2020, 12:22 HRS IST
  • PTI
  • US removes currency manipulator label on China ahead of inking of trade deal

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17:58 HRS IST

(Eds: Updating with more inputs, reax)

Washington/Beijing, Jan 14 (PTI)
The US has reversed its decision to brand China a "currency manipulator" as the world's two major economies prepare to conclude a "phase one" deal on Wednesday to end their bruising trade war.

President Donald Trump has repeatedly accused China of allowing the value of the yuan to fall, making Chinese goods cheaper. The US officially named China a currency manipulator in August last year when trade tensions were high between Beijing and Washington.

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

Announcing the revocation of China's currency manipulator status, US Treasury Secretary Steven T. Mnuchin said, "China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability."

"The Treasury Department has helped secure a significant Phase One agreement with China that will lead to greater economic growth and opportunity for American workers and businesses," he said in Washington on Monday.

China has also agreed to publish relevant information related to exchange rates and external balances, the Department of Treasury said in a report.

Meanwhile, after depreciating as far as 7.18 RMB per US dollar in early September, the RMB subsequently appreciated in October and is currently trading at about 6.93 RMB per dollar, it said.

"In this context, Treasury has determined that China should no longer be designated as a currency manipulator at this time," the report added.

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".

Reacting to the US decision, China said on Tuesday said the Trump administration reversing the previous decision to declare it as a currency manipulator is in line with "facts" and claimed that the exchange rate of its currency is based on the "economic fundamentals" of the Chinese economy.

"China is not an exchange rate manipulator," Foreign Ministry spokesman Geng Shuang told a media briefing in Beijing on Tuesday.

"The latest conclusion of the United States is in line with the facts and the consensus of the international community. A recent International Monetary Fund assessment concluded that the level of the RMB exchange rate is generally in line with economic fundamentals, and objectively denied that China is a "currency manipulator," he noted.

China is a responsible big country, he said, adding that "we have repeatedly reiterated that we will not engage in competitive currency devaluation and do not use the exchange rate as a tool to deal with external disturbances such as trade disputes."

Meanwhile, the US and China are set to sign the first phase of a Phase One trade deal on January 15, President Donald Trump indicated last Thursday.

Beijing's trade envoy Vice Premier Liu He is in the US to sign the interim agreement's "Phase One", marking a pause in the nearly two-year trade war between the two sides.

"We're signing, as you know, a very big deal among many other things with China probably on January 15," Trump told reporters at a White House event last week.

The "phase one" pact is aimed at de-escalating the tit-for-tat tariff war the two countries have engaged in since 2018.

President Trump launched the trade war with China last year demanding Beijing to reduce the massive trade deficit amounting to USD 539 billion in the bilateral trade.

Trump is also demanding an intrusive verification mechanism to supervise Beijing's promise to protect intellectual property rights (IPR) technology transfer and more access to American goods to Chinese markets.

China's overall trade with the United States plunged nearly 15 per cent last year, according to the data. But a senior customs official said that China's imports from the US rebounded in November and December, especially with the trade of soybeans, pork and cars, CNN reported.

Separately, government data showed Tuesday that China's global trade fell 1 per cent in 2019 to USD 4.6 trillion, as measured by the value in US dollars of the country's imports and exports.

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