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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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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.

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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.

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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

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India And Vietnam Come Together Against Maritime Rival China

Beijing has been protesting against joint Vietnamese-Indian oil exploration activities in the South China Sea for almost a decade, but New Delhi has refused to budge.

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Indian President Ram Nath Kovind, left, shakes hands with Vietnamese President Nguyen Phu Trong before heading for talks behind closed doors in Hanoi, Vietnam. VOA

Advances in relations between Vietnam and India will help both countries resist Chinese expansion in Asia including the contested South China Sea, Asia scholars say.

India-Vietnam relations are growing again this week as Indian President Shri Ram Nath Kovind visits Vietnam Sunday through Tuesday. He was set to meet Vietnamese President Nguyen Phu Trong for closed-door talks.

The visit advances a long-standing, fast-improving friendship that began in the 1970s, when Vietnamese leaders tapped India to diversify foreign policy, and leapt forward in 2016 when the two sides entered a strategic comprehensive partnership. Now both worry about China.

“Given a shared apprehension of Chinese assertiveness, New Delhi seeks to bolster Hanoi’s capabilities to check China, to expand Indian influence in Southeast Asia as a counterweight to China’s growing footprint in South Asia,” said Sameer Lalwani, deputy director for U.S. think tank The Stimson Center’s South Asia program.

India, elections, vietnam
India’s Prime Minister Narendra Modi gestures as he addresses the gathering during the ‘Global Mobility Summit’ in New Delhi, India, VOA

South China Sea dispute

Vietnam and four other governments dispute all or part of Beijing’s claim to about 90 percent of the South China Sea. The two sides got into two deadly ship clashes, in 1974 and 1988, and rammed each other’s boats in 2014. China cites historical documents to support its claims.

India, located west of the Indochinese peninsula, does not claim the sea that lies east of Vietnam.

But last year hundreds of Chinese and Indian troops faced off on a Himalayan plateau disputed by China and India’s ally Bhutan. India also resents China’s support for its territorial rival Pakistan. It has grown eager to help Australia, Japan and the United States patrol Asian seas where China has alarmed other countries by landfilling tiny islets, in some cases for military use.

Those countries want the 3.5 million-square-kilometer South China Sea open internationally instead of under increasing Chinese control.

“I think Vietnam wants India to play a more active role in the South Asian region because Vietnam knows that India is not so active in the quadrilateral, including the U.S., India, Australia and Japan,” said Trung Nguyen, director of the Center for International Studies at Ho Chi Minh University of Social Sciences and Humanities.

India-Vietnam
Indian President Ram Nath Kovind, right, and his Vietnamese counterpart Nguyen Phu Trong review an honor guard in Hanoi, Vietnam. VOA

​India and Vietnam held their first joint drill In the Bay Of Bengal in October to strengthen “working-level” relations, the Press Trust of India says. India has offered Vietnam $500 million in credit for arms purchases, as well, and proposed a South China Sea warning system able to send tsunami data to Vietnam.

Oil and gas exploration

Vietnam and India will use fuel exploration to consolidate their stand in the South China Sea, and with a potential profit, analysts forecast.

India and Vietnam already do “robust” trade, worth $12.8 billion in 2017-2018, the Indian Ministry of External Affairs says. Bilateral trade should reach $15 billion by 2020, the vice chairman of the Indian Business Chamber of Vietnam said last year. Indian investment in Vietnam was $2 billion then.

For the past four years, the overseas subsidiary of India’s government-run ONGC has worked with PetroVietnam Exploration Production Corp. to search for oil and gas in the South China Sea. China is probably watching warily, experts say.

Climate Change, Indian President Ram Nath Kovind, right, and his Vietnamese counterpart Nguyen Phu Trong review an honor guard in Hanoi, Vietnam
Submerged tombs are seen at a flooded village after heavy rainfall caused by tropical storm Son Tinh in Ninh Binh province, Vietnam. VOA

Vietnam happens to need outside expertise and investment to find gas and oil off its long seacoast. Both domestic and foreign oil firms would earn money from any discoveries.

“The issue of oil is probably one of the larger political elephants in the room, so to speak,” said Maxfield Brown, senior associate with the business consultancy Dezan Shira & Associates in Ho Chi Minh City. “I’m sure that Vietnam is keen to find countries that are willing to invest in its natural resources and aren’t necessarily scared off by the threat of Chinese naval incursions.”

Spanish driller Repsol quit a Vietnamese-approved project in the South China Sea in March, apparently under pressure from China, media reports said then. Vietnam is now considering a $4.6 billion gas exploration project with ExxonMobil, local partner CNG Vietnam Joint Stock Co. says. China claims that site, as well.

“Vietnam is always trying to get them to do more exploration and India has been wary of holding onto blocks that aren’t productive or getting blocks that are in sensitive areas vis-a-vis China,” said Carl Thayer, professor emeritus with the University of New South Wales in Australia.

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India has shown little fear to date, said Mohan Malik, professor in Asian security, Daniel K. Inouye Asia Pacific Center for Security Studies in the United States.

“Beijing has been protesting against joint Vietnamese-Indian oil exploration activities in the South China Sea for almost a decade, but New Delhi has refused to budge,” Malik said. “Through joint naval exercises and port calls at Vietnamese ports, New Delhi is signaling to Beijing that China’s growing naval expansion…would be countered by India’s naval outreach in the South China Sea.” (VOA)