US labels China as currency manipulator

Washington/Beijing: The US has officially labelled China a 'currency manipulator', accusing it of using the yuan to gain 'unfair competitive advantage', a charge dismissed by Beijing as 'wayward unilateralism and protectionist', further escalating the tense trade war between the world's two largest economies.

The Trump administration's move came as Beijing allowed its currency to fall below the politically sensitive level of seven yuan to the US dollar on Monday for the first time in 11 years and Chinese firms have reportedly stopped buying US farm produce.

During the 2016 presidential elections, President Donald Trump had promised to label China as a currency manipulator, but the Department of Treasury kept the country on its watchlist, declining to take the final step.

On Monday, the Treasury Department announced, "Secretary (Steven) Mnuchin, under the auspices of President Trump, has today determined that China is a 'Currency Manipulator'."

Mnuchin, after this decision, will engage with the International Monetary Fund to eliminate the "unfair competitive advantage created by China's latest actions", the treasury said.

Earlier, Trump tweeted, "China is intent on continuing to receive the hundreds of Billions of Dollars they have been taking from the US with unfair trade practices and currency manipulation.

So one-sided, it should have been stopped many years ago!" Trump has repeatedly ar gued that China has depreciated the yuan slowly in the last year to help offset tariffs on billions of dollars of Chinese goods amid an ongoing trade war between the two major economic superpowers.

In a statement, the treasury department alleged that China has a long history of facilitating an undervalued currency through protracted, large-scale intervention in the foreign exchange market.

In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past, it claimed.

"The context of these actions and the implausibility of China's market stability rationale confirm that the purpose of China's currency devaluation is to gain unfair competitive advantage in international trade," the treasury said.

Chinese authorities have acknowledged that they have ample control over the yuan exchange rate, it added.

The treasury referred to a statement by the People's Bank of China (PBOC) which noted that it "has accumulated rich experience and policy tools, and will continue to innovate and enrich the control toolbox, and take necessary and targeted measures against the positive feedback behaviour that may occur in the foreign exchange market."

This is an open acknowledgement by the PBOC that it has extensive experience manipulating its currency and remains prepared to do so on an ongoing basis, it alleged.