picture/Beijing News Network.
The US Treasury Department announced on the afternoon of August 5th local time that it would list China as a exchange rate manipulator. The statement said, "With the support of President Trump and President ", Treasury Secretary Mnuchin has determined that China is a exchange rate manipulator.
Just the day before, the RMB exchange rate against the US dollar offshore and onshore both fell below the psychological threshold of 7 yuan, setting the largest drop in 11 years.
In fact, for the decline in the RMB exchange rate, I proposed in my article two months ago: "In the medium and short term, the RMB will maintain a relatively reasonable range of 6.5 to 7.5 (that is, the positive and negative deviation of 7 is 10%). At the same time, the RMB exchange rate fluctuates in both directions, market expectations are significantly differentiated, and the exchange rate elasticity is enhanced." To this day, I still insist on this judgment.
In other words, the fluctuation of the RMB exchange rate has its own resilience, so it is not intended to be done deliberately. This time, the Trump administration has designated China as a exchange rate manipulator, with the purpose of putting pressure on the grounds of breaking 7. In the final analysis, it is still a continuation of trade frictions, or even an escalation to some extent.
The attitude of the United States is very obvious: I will "fight" with you. But in fact, when the United States determines whether other countries manipulate exchange rates, it is already reflecting its own protectionist tendency and beyond its own exercise of national sovereignty. Previously, between 1992 and 1994, the United States identified China as a exchange rate manipulator five times. Although it has not taken practical actions, the threat of using it to hit other countries has never stopped.
After 25 years, the United States once again labeled China as "exchange rate manipulation", and even hurriedly "criminal" based on the single-day price fluctuations. It is almost predictable in the context of current Sino-US relations and Trump's style of conduct. First putting a big hat on it and then using it to increase negotiation chips is another old trick of Trump's "extreme pressure".
Next, it is not ruled out that the Trump administration will further escalate the difficulty of negotiations and even unilaterally impose a series of sanctions. In this regard, we must be fully prepared and not be too pessimistic.
However, it is worth noting that given the special status of the US dollar in international trade, the United States' recognition of China's "exchange rate manipulator" is actually putting pressure on other countries in the trade system.
I once had a conversation with a former senior Federal Reserve official and talked about the issue of "exchange rate manipulation". The other party said that in the current U.S.-China relationship, this name is meaningless. Given the current tensions between the two countries, Trump intends to use this to fight for more tariffs. The real question is how other regions react to this recognition, and if other countries do not recognize it, the United States will be isolated.
After all, the exchange rate is just a means, and the economy is the goal. From the perspective of the United States, it wants to pour this basin of water on China, and it also uses exchange rates as a means to ultimately interfere with the domestic economy.
borrowed the response of the head of the People's Bank of China to break the "7" this time. The trend of the RMB exchange rate depends on fundamentals in the long run. As a big country, China has a complete range of manufacturing industries, a relatively complete industrial system, strong competitiveness in the export sector, moderate dependence on imports, and fluctuations in the RMB exchange rate have a strong regulatory effect on China's balance of payments, and the foreign exchange market itself will find a balance.
treats the normal "ups and downs" of the RMB as "exchange rate manipulation" in an exaggerated manner, which is a "crime to be added", and it is just a repetition of all problems.
□Chen Sijin (senior financial risk management consultant)
Editor Meng Ran Proofreading Liu Baoqing
