BEIJING, Aug. 6 (Xinhua) — Despite the conspicuous progress China has made in exchange rate reform, the U.S. government labeled China as a currency manipulator, unilaterally and severely escalating trade conflicts between the two countries.
It bluntly politicizes the exchange rate issue and blatantly uses bullying tactics against China once again, which will inevitably trigger a backlash.
China was labeled by the United States as a currency manipulator in 1994 when China’s exchange rate reform was yet to take place. More than 20 years on, China has steadfastly deepened the market-oriented reform of its currency exchange rate, continued to improve the floating exchange rate system based on the market supply and demand and with reference to a basket of currencies, and worked to keep the renminbi exchange rate basically stable, reasonable and balanced.
For many reasons, China cannot lay claim to the title of currency manipulator. For instance, its current account surplus accounts for only 0.4 percent of its gross domestic product, which absolutely fails to meet the U.S. criteria for identifying manipulation among major trading partners.
According to the data published by the Bank for International Settlements, from the beginning of 2005 to June 2019, the nominal effective exchange rate of the RMB appreciated by 38 percent and the real effective exchange rate by 47 percent, making it the strongest currency among the G20 economies and one of the currencies with the largest appreciation in the world. The International Monetary Fund recently concluded the yuan’s exchange rate was broadly in line with fundamentals. Since 2018, the United States has escalated trade disputes, China has insisted on not engaging in competitive devaluations, and China has not and will not use the exchange rate as a tool to deal with trade disputes.
The U.S. side hastily labeled China as a currency manipulator, but it was only based on groundless and ridiculous accusations. It betrays its ill-intention to scapegoat the currency issue in its escalating conflicts with China, but it lacks any meaningful tools to do anything about it and the move carries no real significance.
The U.S. move is harmful to others and itself, and China firmly opposes this. This will not only seriously undermine the international financial order and lead to financial market turbulence, but will also greatly hinder international trade and global economic recovery, and ultimately will suffer from its own misdeeds. This unilateralist action has also undermined the global multilateral consensus on exchange rate issues and will have a serious negative impact on the stable operation of the international monetary system.
The U.S. side has intensified shots on China in many arenas. But the Chinese people, who have cast aside their illusions and stand ready to fight a protracted trade war with the United States, will not be intimidated.
China has the concrete foundation, confidence and ability to maintain the stable operation of the foreign exchange market and the basic stability of the RMB exchange rate at a reasonable and balanced level.
China’s economic growth will remain stable and will become more resilient and sustainable. In the first half of this year, China’s economy grew by 6.3 percent year on year, and the economy has been operating within a reasonable range. By the end of June this year, China’s foreign exchange reserves stood at 3.1192 trillion U.S. dollars, ranking first in the world. Moreover, all foreign debt indicators are within the internationally recognized safe levels and can effectively cope with shocks from the international market.
The U.S. side should stop its ugly farce and bullying, and deal with China with a little more rationality and objectivity before the situation goes too far.