A report from the US Treasury Department on Friday said China was not a currency manipulator, but singled out China and give other countries as needing to be monitored over their currency practices.
While the Treasury did not name China a currency manipulator, its assessment on China was longer and harsher than its last report released in October 2016.
China is the largest source of the US trade deficit, and Trump has previously criticized China for unfairly devaluing its currency to give it an unfair competitive advantage in worldwide markets. “This is in notable contrast to several prior years of asymmetric intervention to resist won appreciation”, it said. “In its last analysis of the won, the IMF [International Monetary Fund] maintained its assessment that the won is undervalued”.
But it is not easy for Taiwan to be removed from the monitoring list since the country is a small scale and open economy which tends to post a large current account surplus, the central bank said.
The Central Bank said the publication of the USA report was unlikely to cause any ripples in the foreign exchange market because its conclusions on Taiwan had been expected.
President Trump is said to be talking tough with Chinese president Xi Jinping after North Korea’s dictator Kim Jong-Un tried and failed to launch another missile yesterday. This idea wasn’t on Trump’s radar before the election, especially not with respect to China.
The other reason linkage likely won’t work for North Korea is that Trump hasn’t credibly given China enough incentive. In a statement, the Treasury department said the findings and recommendations of the report are meant to combat “potentially unfair currency practices” and support the growth of free and fair trade.
Unlike years ago, China’s currency policy has also become less of an issue on Capitol Hill in recent years. The interest rate policy of the US central bank, the Federal Reserve (the “Fed’), is at least as important a reason for the greenback’s continuing rise”.
Upon announcing his candidacy in 2015, Trump said that China’s currency practices were making it impossible for American companies to compete and declared, “They’re killing us”.
However, the Korean government continues to remain alert as it’s possible it may be elevated to manipulator status.
Trump’s national security adviser said on Sunday that the United States, its allies and China are working together on a range of responses to North Korea.
But with one eye on the colossal United States trade deficit, Trump sees things a little differently.
As for Taiwan and Korea?
McMaster told Raddatz that he is working with USA allies and China to develop a “range of options” for President Trump to respond if North Korea refuses to end its nuclear program. ” in an interview with The Wall Street Journal published last week”.
“I think our dollar is getting too strong and partially that’s my fault because people have confidence in me”, he said.
According to the official, through that mechanism they will try to boost USA exports and the reduction of the commercial deficit of Washington with Beijing, criticized once and again by Trump since his stage as Republican candidate to the presidency.