China said on Monday that it has “no desire” to devalue the yuan to help exports, noting that the value of its currency is driven by market forces and after Washington said it was monitoring the currency’s weakness after President Donald Trump took issue with the yuan’s month-long losing streak.
At a daily news briefing on Monday, foreign ministry spokesman Geng Shuang was asked about comments on Friday by U.S. Treasury Secretary Steven Mnuchin, who told Reuters the yuan’s weakness would be reviewed as part of the Treasury’s semi-annual report on currency manipulation, which is due on Oct. 15.
“The exchange rate of China’s RMB is determined by the market. There are ups and downs. It’s a two-way float,” Geng said adding that “China has no intention to use means like the competitive devaluation of its currency to stimulate exports.”
The Chinese Foreign Ministry also said that “threats and intimidation will never work on our Chinese people and we are confident of our ability to uphold our interests” after Trump said he was ready to impose tariffs on all $500 billion of goods imported from the country.
Urging the U.S. to “remain calm and maintain a rational attitude”, Geng said that “the U.S. is bent on provoking this trade war. China does not want a trade war but we are not afraid of one.”
Mnuchin’s comments were the first since the early days of the Trump administration in 2017 that raised the prospect of designating China as a manipulator. Neither the People’s Bank of China nor the State Administration of Foreign Exchange responded to Reuters requests for comment on Mnuchin’s remarks.
Earlier this month, the United States imposed tariffs on $34 billion of Chinese imports. China promptly levied taxes on the same value of U.S. products.
China’s yuan, battered by the trade brawl and strong dollar, has lost more than 7% against the greenback since the end of the first quarter. After initially gaining in Monday trading, the offshore Yuan slumped as the dollar rose, and was last trading at the PBOC’s “revised red line” of 6.80.
Trump’s charges that China is “manipulating” a currency that’s been “dropping like a rock” came at the end of a six-week slide that took it to its lowest level in more than a year against the dollar. Trump said this is “taking away our big competitive edge.”
The president also said he’s “ready to go” with new tariffs on $500 billion of Chinese imports, which would be roughly the value of all Chinese goods imported to the U.S. last year.
That, as Bloomberg notes, is a clear sign that the brewing trade war between the world’s two largest economies is nowhere near an easy end.
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