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China And Russia Accused of Manipulating Their Currencies By Trump

Donald Trump to accuse China and Russia as their currency manipulators

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Donald Trump
Trump open to meeting Kim again. (Wikimedia Commons)

U.S. President Donald Trump said on Monday it is unacceptable that Russia and China are devaluating their currencies, days after the Treasury Department declined to label these countries as currency manipulators in its latest report.

Amid a possible new round of sanctions against Russia and a simmering trade war with China, Trump tweeted Monday morning, “Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!

In general, when a country artificially devaluates its currency, its exports become cheaper and more competitive in the global marketplace.

The currencies of U.S, China and Russia.
FILE – The U.S. dollar, Indonesian rupiah and Chinese renminbi currencies are displayed in the poster of a money exchange shop in Jakarta, June 12, 2013. VOA

During his presidential campaign, Trump has repeatedly accused China of lowering the value of its currency and vowed to formally label China as a currency manipulator, but so far has failed to do so.

White House Press Secretary Sarah Sanders says the administration is closely watching China’s currency practices. “That’s something that the Treasury Department is watching very closely and we’re continuing to monitor it,” she said Monday.

In a semiannual report titled “Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States” released last Friday, the Treasury Department did not designate China as a currency manipulator, but put it as one of the six countries on a monitoring list. The other five countries on the list are Japan, Korea, India, Germany, and Switzerland. Russia is not on the monitoring list. The Chinese currency, the renminbi, has appreciated over 3 percent against the dollar since the beginning of this year, after strengthening by over 6 percent in 2017.

Also Read: Trump: US ‘Being Stolen’ by Illegal Migrants

Brad Setser,a senior fellow at the Council on Foreign Relations and a former Treasury Department official said in an interview with VOA he does not think it is an accurate complaint that Russia and China are playing the currency game.

“The Russian ruble was actually quite stable before the sanctions on Russia were intensified. It’s quite clear the volatility in the ruble is a function of the intensification of U.S. sanctions, a sign that the sanctions are biting,” he explained.

Setser said over the past several months, the Chinese yuan has actually appreciated, and China has not been intervening heavily.

“There are plenty of things to criticize China for on trade, but right now, there’s no real basis for criticizing China on currency,” he noted.

Russia's Central Bank Chief.
Russia’s Central bank chief Elvira Nabiullina presents the new 2,000 and 200 ruble banknotes in Moscow on Oct. 12, 2017. VOA

In the past three years, the Federal Reserve raised interest rate six times to a range between 1.5 percent and 1.75 percent, and said they expect to raise the rate two or three more times this year.

Usually, when a country raises its interest rates, the value of its currency rises, making its exports more expensive and less competitive. However, higher U.S. interest rates have not raised the value of the dollar.

“The interesting puzzle that the market has been pondering for the past several months is that the dollar has actually weakened even as the U.S. has raised rates, and even as U.S. passed legislation to expand the fiscal deficit,” Setser said.

Also Read: This Way China Can Help India In The Terms of Artificial Intelligence

Former Deputy Assistant Secretary for International Economic Analysis at the Treasury Department Setser stressed the United States should not label China as a currency manipulator at this moment.

“It would undermine the United States’ credibility to name China at a point in time when there is no plausible case that China is managing its exchange rate in a way that is adverse to the U.S. interest,” he said.  VOA

Next Story

Trade War Between Washington and Beijing Effecting Farmers

Roger Lande says sometimes China does things “we don’t like,” but all relationships, with family, friends and business associates, have ups and downs.

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China, USA, Trade War
U.S. President Donald Trump and Chinese President Xi Jinping participate in a welcome ceremony at the Great Hall of the People in Beijing, China. VOA

The trade war between Washington and Beijing is hurting farmers who grow huge amounts of soybeans in Iowa for export to the massive Chinese market.

Farmers in Iowa hope that the strong commercial and close personal relationships that China and the U.S. farm state have nurtured for many years will help the two sides overcome complications like the record U.S. trade deficit with China.

Chinese President Xi Jinping has visited Iowa farmers repeatedly over the past couple of decades and former Iowa governor Terry Branstad is now the U.S. ambassador to Beijing.

The close ties have been strained by Washington’s allegations that China unfairly manipulates markets, steals American intellectual property, and creates bureaucratic obstacles to trade. China also accuses the United States of unfair practices.

FILE - Justin Roth holds a handful of soybeans at the Brooklyn Elevator in Brooklyn, Iowa, Nov. 21, 2018.
– Justin Roth holds a handful of soybeans at the Brooklyn Elevator in Brooklyn, Iowa, Nov. 21, 2018. (voa0

Tariff war

The United States imposed tariffs on Chinese exports, and Beijing retaliated with tariffs on American agricultural products.

That meant that Iowa soybeans were more expensive and less competitive on global markets.

Demand for U.S. soybeans — and prices paid to U.S. farmers — plunged $85 a metric ton.

An Iowa farmer who manages several farms, including 153 hectares of soybeans, says his profits fell 100 percent for 2018. David Miller is not happy to lose money but says without the tariffs, China would not pay any attention to the talks.

FILE - farmer Michael Petefish walks through his soybeans at his farm near Claremont in southern Minnesota.
– farmer Michael Petefish walks through his soybeans at his farm near Claremont in southern Minnesota.(VOA0

Needing each other

China really needs what Iowa produces, according to Grant Kimberley, the marketing manager for the Iowa Soybean Association, who has been to China more than 20 times.

“China needs soybeans … because their middle class has grown, and that means they are eating more protein in their diet, more meat, and if you have more meat production, you have to have more soybeans to feed those animals,” he said.

Kimberley’s family runs a 600 hectare farm, 48 kilometers from Des Moines, which was one of the places visited by Xi, who saw that it uses more advanced equipment and technology than is available to Chinese farmers.

The former director of Iowa’s department of natural resources, Roger Lande, and his wife, Sarah, have twice hosted Xi, at their home in the small town of Muscatine.

Also Read: Amidst Weakened Domestic Demand, China Expected To Report Slow Economic Growth

Roger Lande says sometimes China does things “we don’t like,” but all relationships, with family, friends and business associates, have ups and downs.

Kimberley is optimistic things will work out.

“Because that’s a long-standing relationship that’s been in place for 35 years,” he said. And “I think the overall underlying support and the people that are involved between the states and the province is still strong. And, and everybody recognizes that, over the long term, eventually this will get resolved,” he added. (VOA)