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US officially designates China a ‘currency manipulator’ as trade war rages

US officially designates China a ‘currency manipulator’ as trade war rages

The United States has formally accused China of manipulating its currency, marking the second major escalation in the two countries’ spiralling trade war in just 24 hours.

Washington’s sudden move came the day China allowed the yuan to fall below seven to the dollar for the first time in about a decade – provoking US President Donald Trump’s ire and sending global equities markets diving into the red.

Wall Street yesterday posted its worst one-day losses of 2019 as hope of any near-term resolution to the year-long trade war between the world’s top two economies appeared to slide out of view.

In a Twitter outburst earlier in the day, Mr Trump had angrily accused Beijing of weakening the yuan “to steal our businesses and factories”.

Chinese state media also announced yesterday that Beijing had suspended purchases of American farm exports, piling pain on US agricultural states already battered by Beijing’s retaliation in the trade war.

US Treasury Secretary Steven Mnuchin, “under the auspices of President Trump, has today determined that China is a currency manipulator,” the Treasury Department said in a statement.

As a result, Mr Mnuchin will engage the International Monetary Fund “to eliminate the unfair competitive advantage created by China’s latest actions,” the statement said.

Behind the US and China’s conscious economic decoupling

The new designation is largely symbolic, since it calls for consultations with countries found to be manipulating their currencies.

But it could gain teeth if the Commerce Department begins imposing tariffs on countries found to be undervaluing their currencies, as that department said earlier this year it plans to do.

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China’s exports fall ahead of crucial trade talks

China’s exports fall ahead of crucial trade talks

China’s exports fell more than expected in April while imports rose, official data showed today ahead of high-stakes talks aimed at resolving a trade war with the US.

The world’s two leading economies face a possible make-or-break moment when top negotiators meet in Washington this week following months of fraught talks.

US President Donald Trump has upped the ante with plans to more than double tariffs on $200 billion in Chinese goods on Friday, the last day of a two-day visit by President Xi Jinping’s point man Vice Premier Liu He.

The trade war has battered shipments between the economic giants.

In April, China’s exports across the Pacific fell 13.2% from a year earlier, while imports from the US fell 25.7%, according to the data from China’s customs administration.

The politically sensitive trade surplus with the US remained large, widening to $21 billion last month from $20.5 billion in March. Last year it hit a record $323.3 billion.

Global markets have taken a beating this week as investors grow increasingly concerned that the China-US trade deal, which last week appeared all but ready to sign, could fall through.

US negotiators accused Beijing of reneging on commitments made during months of talks focusing on clamping down on theft of US technology and reducing China’s massive subsidies.

Analysts said that if Trump’s threat becomes reality, it will be a game changer for the global economy.

They added that the worst-case scenario would result in a US recession and a rapid reduction of growth in China.

Tepid global demand for China’s goods have heightened the risk for Beijing, which posted 6.4% economic growth in the first quarter, having decelerated every quarter last year.

China’s exports to the world sank 2.7% on-year last month while imports rose 4%, producing a trade surplus of $13.8 billion.

Economists polled by Bloomberg had expected a 3% rise in exports with imports projected to fall 2.1%.

Beijing has moved to jumpstart its cooling economy this year with massive tax cuts and fee reductions, and a targeted reduction in the amount of cash that small and medium-sized banks must hold in reserve announced on Monday.

But the central bank has yet to cut interest rates.

In March China’s exports unexpectedly jumped 14.2%, and analysts caution it is difficult to compare trends at the start of the year due to the Chinese New Year holiday, which fell in February.

Over the first four months of the year China’s exports rose only 0.2% on-year while imports dropped 2.5%, both down from the final quarter of last year.

Data last week showed China’s factory activity softened in April, with the new export orders sub-index rising from March, but remaining in contraction territory.

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