Trump pulls his punches on China and Germany

21 April, 2017, 19:56 | Author: Leticia Walters
  • World power whiplash Trump reverses views on Russia China

Trump, in a Wall Street Journal interview, said China had not manipulated the yuan for months, while accusing nations that he didn't identify of devaluing their currencies and saying the United States dollar is getting too strong.

China, Germany, Japan, Korea, Switzerland and Taiwan remained on a previously established watch list of countries in the Trump administration's first report on currency values.

One of Donald Trump's most prominent trade advisers has rounded on the president for his U-turn on branding China a currency manipulator.

The Treasury also warned that it will scrutinize China's trade and currency practices very closely and called for faster opening of China's economy to United States goods and services and a shift away from exports to more domestic consumption.

The decision was expected after President Donald Trump this week reversed himself and said China was not a currency manipulator.

The report came after China data showed its surplus with the United States was almost unchanged in the first quarter compared to a year earlier at $49.6 billion, and cited China's market protection as an impediment to a balanced trade relationship. The Treasury report recognized what many analysts have said over the past year, namely that China has recently intervened in foreign exchange markets to prop up the value of its yuan currency, not push it lower to make Chinese exports cheaper.

"In this status, China will have to prove that the lack of intervention to curb the growth rate of the national currency within three years has been a sustainable policy", the U.S. Treasury Department emphasized.

China met only one of the three criteria required to be labeled a currency manipulator - a large trade surplus with the United States - while Germany also met a second: a current account surplus amounting to more than three percent of the nation's economic output.

That "distortion in the global trading system. imposed significant and long-lasting hardship on American workers and companies".

On Friday, the Treasury Department issued its first report on the currency practices of America's trading partners.

Because it had been more than two decades since any country had been named a currency manipulator, Congress in 2015 changed the law to require Treasury to put countries on a less onerous "monitoring" list. Such partnerships would likely also have to clear national security hurdles.Sceptics also wonder if Chinese cooperation in redressing the trade imbalance will be limited to areas that serve Chinese needs, such as increasing imports of USA gas, oil and coking coal.

Increased demand "would place upward pressure on the euro. and help reduce its large external imbalances", increasing domestic consumption, including of imported goods.

"They're not currency manipulators", he said in an interview. The Treasury Department continued to call for reforms to the labor market that would improve Japanese workers' productivity, along with fiscal and monetary support for the Japanese economy.

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