Us China Currency Agreement
Trump has long criticized China`s monetary practices and argues that Beijing is weakening the renminbi to make Chinese exports cheaper to the United States. Trump accused China of doing just that in August, when Beijing weakened its currency, and said it was an attempt to mitigate the impact of tariffs he had imposed on Chinese imports. The agreement provides the United States with certain benefits in financial services, including electronic payments, securities, fund management and insurance, but many of these changes were already underway. Already in 2017, in its attempt to ease tensions with the Trump administration, China had tried to give foreign companies greater supremacy in its financial sector, and U.S. banks and other companies held majority stakes in Chinese companies. When trade negotiations with China intensified last summer, Mr. Trump became increasingly frustrated and used the weakening of the Chinese currency as another lever. Despite his own resistance, Mnuchin used his discretion as finance minister to impose the label at Mr. Trump`s insistence.
WASHINGTON (Reuters) – The U.S. Treasury on Monday abandoned its designation of China as a currency manipulator days before signing a tentative trade deal to facilitate an 18-month-old customs war. According to the U.S. definition, monetary manipulation is a country`s deliberate attempt to influence exchange rates between its currency and the U.S. dollar in order to obtain an “unfair competitive advantage in international trade.” The initial decision to stigmatize China as a manipulator was surprisingly announced in August and overturned a decision in May by the Ministry of Finance that no country manipulated its currency. The United States had not blacklisted any countries since the Clinton administration called China a manipulator 26 years ago. Trump had long accused China of manipulating its currency, though most independent experts have concluded that Beijing did not do so years ago. The deal signed Wednesday has some victories for Mr. Trump: China has pledged to buy an additional $200 billion in U.S. goods and services by 2021 and to aggressively address trade practices that the Trump administration has criticized.