spot_img
27.5 C
Philippines
Friday, March 29, 2024

Who’s manipulating what

- Advertisement -

"What is the US president saying?"

 

 

US President Donald Trump just wouldn’t learn.

Still reeling from his Huawei bluff which backfired, Trump tried to amplify his trade war with China anew, this time labeling his country’s second largest trading partner a currency manipulator.

This was after the Chinese yuan depreciated to a level lower than seven yuan to a dollar.

- Advertisement -

Of course, Trump had reasons to suspect this was a China retaliatory tactic as it was his government which imposed a 10 percent tariff on $300 billion worth of goods coming to the United States starting September 1.

By allowing its currency to weaken against the dollar, US importation with China, particularly agricultural products, could severely be affected. In Trump‘s own words, that particular move by China will “steal our business and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices.”

 However, Trump’s words run counter to that of the opinion of the United States Treasury.

In a statement released by the Chinese Embassy, Trump and his administration’s claim cannot be more false, as according to the United States Treasury, a country becomes a currency manipulator if they do all these three things: (a) They have a significant trade surplus with the United States; (b) The have a material current account surplus of more than 3 percent of GDP; and (c) There is persistent one-sided intervention in its currency market.

Among these three, the Chinese Embassy insists only one applies to them, which is that they have a significant trade surplus with the US, and as such, it is unfair to label them as a currency manipulator seeing that it did not even do the other two actions that would make it one in the first place.

Furthermore, no less than the International Monetary Fund has disproved the Trump statement by releasing a report concluding that the exchange rate of the Chinese yuan was “broadly in line with medium-term fundamentals,” and that the Chinese monetary authority barely intervened in the foreign exchange market. 

The report stated that the People’s Bank of China, which is the country’s central bank, had “little FX (foreign exchange) intervention.”

The conclusion of the International Monetary Fund provided authentic evidence that China is committed to keeping the yuan generally stable and it has not been artificially depreciating the yuan for trade advantages as what the Trump administration has accused it of doing. 

It was market forces that led to the Chinese yuan’s recent depreciation, forces that were influenced by the trade war of the Trump administration.

The problem with Trump, is that in his obsession to get back at China, his moves seemed to be out of place, ill-advised or even lack any study to begin with.

With Huwaei fast gaining traction against iPhone’s market, Trump ordered American companies to stop any dealing with the Chinese cellphone manufacturer, including Google, which supplies Huawei’s operating system—the Android OS.

But unknown to them, Huawei has already developed its own operating system independent of Google. Thus, instead of forcing Huawei to its knees, it was the US companies which were made to suffer with billions of dollars lost in potential sales.

And now, after imposing another round of tariff on Chinese goods, Trump was quick to cry foul after the Chinese currency dropped significantly for the first time in a decade, but which the IMF branded as but normal market dictates. 

Clearly, Trump appears to be the one manipulating in his attempt to outwit the Chinese in the trade which he himself had initiated. Unfortunately for him, everything backfires right in his face.

- Advertisement -

LATEST NEWS

Popular Articles