Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Reason Magazine (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

Trump Administration Labels China a 'Currency Manipulator' After China Briefly Stops Manipulating Its Currency

% of readers think this story is Fact. Add your two cents.


If you want a quick glimpse into the up-is-down, right-is-left world of the United States-China trade war, look no further than something Bloomberg’s Saleha Mohsin wrote Monday.

Referring to comments that Treasury Secretary Steve Mnuchin made in June, Mohsin wrote that the Trump administration believed “China was intervening in currency markets to prop up the yuan, and warned it could be designated a manipulator if it stopped.”

Read that again. China “could be designated a manipulator if it stopped” artificially propping up its currency.

Indeed, that’s exactly what happened on Monday. In response to a renewed threat from Trump to hit Chinese-made goods with tariffs, the Chinese government hit back in part by doing…nothing. China simply allowed the yuan to fall—as it would have, naturally, on the back of the news that the trade war between the U.S. and China was ramping up.

In return, Mnuchin issued a statement accusing China of having taken “concrete steps to devalue its currency”—even though the real culprit for the yuan’s slide is a lack of artificial support, not a deliberate devaluation—and the United States officially declared China to be a “currency manipulator.”

It’s not that the label isn’t accurate. China has been propping up the yuan for years—decades, maybe—as a way to make exports from China more attractive to foreign buyers. It’s worked. But letting the yuan fall on Monday wasn’t an act of currency manipulation. It was the exact opposite. (China did take action on Tuesday to limit the yuan’s slide.)

“As global uncertainty stokes demand for dollars, the certainty of U.S. tariffs on Chinese-originating goods further reduces demand for Chinese yuan, exacerbating the downward pressure on the price of yuan in dollars,” explains Dan Ikenson, director of trade policy studies at the Cato Institute. “The People’s Bank of China observing the value of the yuan plummet as markets respond to Trump’s tariff frenzy is not currency manipulation.”

Writing at Forbes, Ikenson pointed out that the Chinese government has burned through more than $1 trillion trying to keep the yuan from falling as the trade war has taken its toll. Sooner or later, letting the currency fall was almost inevitable.

So this looks like a win for the Trump administration, right? Finally, the trade war is exacting enough of a toll on China that the Chinese government will have to stop propping up its currency—something that Trump believes gives China an unfair advantage.

Except, well, that’s almost completely wrong. Propping up its own currency actually does very little to help China—and probably ends up hurting only the Chinese people. Who benefits from China’s artificially high yuan? Americans.

“To the extent that currency manipulation is real and works as advertised, it makes the exports of countries that practice it artificially inexpensive for foreigners to buy,” Don Boudreaux, an economics professor at George Mason University wrote in February 2017, when Trump first raised the prospect of whacking China over its supposed manipulation of the Yuan. “Currency manipulation transfers wealth from the citizens of countries that practice it to the citizens of countries fortunate enough to buy the manipulators’ subsidized exports.”

In other words, the United States took actions against China with the intention of causing the yuan to lose value—despite the fact that an artificially high yuan is beneficial to U.S. consumers and businesses—and then labeled China a currency manipulator when it stopped manipulating its currency so the yuan could fall in value in response to economic actions designed to create that outcome.

Confused yet?

The bottom line is that the act of calling China a currency manipulator doesn’t mean a whole lot in practical terms. But it does pave the way for the Trump administration to open another front in the trade war and, probably more importantly, it continues to erode the trust between the governments of the world’s two largest economies. That’s why markets reacted poorly yesterday, and why some analysts say the prospect of a global recession is rising. That, and the fact that the ongoing trade and currency war with China is being conducted by a president who doesn’t seem to know whether it’s better to have a weak dollar or a strong one.

So it’s probably no wonder things seem a bit topsy-turvy right now.

“With the Trump administration threatening to stop Beijing’s alleged currency manipulation, and Beijing resisting,” Boudreaux wrote back in 2017, “it’s as if the Trump administration believes itself to be charged with the responsibility of protecting the welfare of the Chinese people at the expense of American citizens, while the government in Beijing plays the role of benefactor of the American people at the expense of Chinese citizens.”

Mercantilism makes for strange bedfellows.


Source: https://reason.com/2019/08/06/trump-administration-labels-china-a-currency-manipulator-after-china-briefly-stops-manipulating-its-currency/


Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Humic & Fulvic Liquid Trace Mineral Complex

HerbAnomic’s Humic and Fulvic Liquid Trace Mineral Complex is a revolutionary New Humic and Fulvic Acid Complex designed to support your body at the cellular level. Our product has been thoroughly tested by an ISO/IEC Certified Lab for toxins and Heavy metals as well as for trace mineral content. We KNOW we have NO lead, arsenic, mercury, aluminum etc. in our Formula. This Humic & Fulvic Liquid Trace Mineral complex has high trace levels of naturally occurring Humic and Fulvic Acids as well as high trace levels of Zinc, Iron, Magnesium, Molybdenum, Potassium and more. There is a wide range of up to 70 trace minerals which occur naturally in our Complex at varying levels. We Choose to list the 8 substances which occur in higher trace levels on our supplement panel. We don’t claim a high number of minerals as other Humic and Fulvic Supplements do and leave you to guess which elements you’ll be getting. Order Your Humic Fulvic for Your Family by Clicking on this Link , or the Banner Below.



Our Formula is an exceptional value compared to other Humic Fulvic Minerals because...


It’s OXYGENATED

It Always Tests at 9.5+ pH

Preservative and Chemical Free

Allergen Free

Comes From a Pure, Unpolluted, Organic Source

Is an Excellent Source for Trace Minerals

Is From Whole, Prehisoric Plant Based Origin Material With Ionic Minerals and Constituents

Highly Conductive/Full of Extra Electrons

Is a Full Spectrum Complex


Our Humic and Fulvic Liquid Trace Mineral Complex has Minerals, Amino Acids, Poly Electrolytes, Phytochemicals, Polyphenols, Bioflavonoids and Trace Vitamins included with the Humic and Fulvic Acid. Our Source material is high in these constituents, where other manufacturers use inferior materials.


Try Our Humic and Fulvic Liquid Trace Mineral Complex today. Order Yours Today by Following This Link.

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.