Premier Li Keqiang, pictured here in Sofia, Bulgaria at a government summit in July.
The Chinese Premier (Prime Minister) Li Keqiang spoke out at the World Economic Forum in Tianjin, telling journalists and investors that China would not devalue the Yuan in order to make exports from the country more attractive to the rest of the world.
America accuses China of providing unfair subsidies to make Chinese exports more desirable than rivals in the US, as well as having breached US intellectual property rights, devalued the Yuan, and even interfered in US politics.
The result is that China is currently subject to $50 billion of trade tariffs from the United States, with an additional $200 billion of tariffs due to be applied on Monday 24th September. China has announced $60 billion of tariffs as retaliation against the USA.
The accusation of currency devaluation has come from the US based on data which shows the Yuan has fallen by 9% this year compared to the US Dollar. The devaluation has partly offset the impact of the US tariffs on Chinese goods, but speaking at the Tianjin forum, Premier Li said: "The recent fluctuations in the [yuan] exchange rate have been seen by some as an intentional measure on the part of China. This is simply not true.
"Persistent depreciation of the [yuan] will only do more harm than good to our country. China will never go down the path of stimulating exports by devaluing its currency"
China has levelled accusations back at the United States, arguing that America hasn’t been sincere or genuine about its trade intentions. At the same time that US officials – led by Treasury Secretary Steven Mnuchin – invited Chinese officials to new talks, President Trump ordered the implementation of these new tariffs, as well as taking to Twitter to air his thoughts:
China has openly stated that they are actively trying to impact and change our election by attacking our farmers, ranchers and industrial workers because of their loyalty to me. What China does not understand is that these people are great patriots and fully understand that.....— Donald J. Trump (@realDonaldTrump) September 18, 2018
.....China has been taking advantage of the United States on Trade for many years. They also know that I am the one that knows how to stop it. There will be great and fast economic retaliation against China if our farmers, ranchers and/or industrial workers are targeted!— Donald J. Trump (@realDonaldTrump) September 18, 2018
Despite China’s Commerce Ministry insisting the latest tariffs weren’t politically targeted, it’s hard to ignore statistics from CNBC which point out that 80% of Red states (Republican) produce goods that fall under China’s tariffs, compared to only 10% of Blue states (Democrat).
This year’s dispute between the US and China isn’t the first time that Donald Trump has been critical of the Asian superpower. During his election campaign he called the country a ‘currency manipulator’, before retracting the statement last year. Speaking to the Wall Street Journal, President Trump changed tack, saying that the Dollar was “getting too strong” and that it would “ultimately hurt the US economy.”
The United States has a large trade deficit and imports far more from China than it exports to them, with many US tech firms like Apple and Dell preferring to base their manufacturing in the country. President Trump advocated, and perhaps even instigated, a weaker Dollar at the start of the year to help promote US exports – something he has criticised China for doing.
After months of back and forth between China and America, the Swiss Central Bank has issued a warning today that the ongoing trade dispute is ramping the US Dollar up too high, threatening emerging markets like Argentina and Turkey, and ultimately risking damage to global economic growth.