Treasury Secretary Steven Mnuchin on Monday determined China is manipulating its currency and will engage with the International Monetary Fund (IMF) to eliminate the “unfair competitive advantage” created by the country’s latest actions, Treasury said in a press release Aug. 5.
“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,” Treasury said. “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 an unfair competitive advantage in international trade.”
The executive branch statutorily is required to increase bilateral engagement with countries it determines are manipulating currency.
In its last biannual report to Congress on foreign exchange policies of major U.S. trading partners sent in May, Treasury found that China met only one of the three criteria necessary to be designated as a currency manipulator — a significant bilateral trade surplus with the U.S.
Treasury cited a statement Monday by the People’s Bank of China (PBOC) that it had rich experience and policy tools, will continue to innovate and enrich the control toolbox and take “necessary and targeted measures against the positive feedback behavior” that could 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,” Treasury said.
President Donald Trump tweeted on Monday about China’s alleged currency manipulation.
“Based on the historic currency manipulation by China, it is now even more obvious to everyone that Americans are not paying for the Tariffs — they are being paid for compliments of China, and the U.S. is taking in tens of Billions of Dollars!” he tweeted. “China has always used currency manipulation to steal our businesses and factories, hurt our jobs, depress our workers’ wages and harm our farmers’ prices. Not anymore!”