China has no desire to boost its exports through competitive devaluation while the nation’s sound economic fundamentals are providing support to the currency, a spokesman said on Monday as U.S. President Donald Trump took issue with the yuan’s month-long losing streak.
“The exchange rate of China’s RMB is determined by the market. There are ups and downs. It’s a two-way float,” Geng Shuang, foreign ministry spokesman, said at a regular briefing in Beijing when asked to comment on Trump’s remarks on the yuan.
China operates a managed floating exchange rate. Inside China, the yuan can trade 2 percent on either side of a daily fixing set by the central bank; a freely traded offshore rate tends to track it.
The U.S. president’s charges that China is “manipulating” a currency that’s been “dropping like a rock” came at the end of a six-week slide that took it to its lowest level in more than a year against the dollar. Trump said this is “taking away our big competitive edge.”
The president also said he’s "ready to go" with new tariffs on $500 billion of Chinese imports, which would be roughly the value of all Chinese goods imported to the U.S. last year. That’s a sign that the brewing trade war between the world’s two largest economies is nowhere near an easy end.
“Threats and intimidation will never work on our Chinese people and we are confident of our ability to uphold our interests,” said Geng, urging the U.S. to “remain calm and rational.”
“The U.S. is bent on provoking this trade war. China does not want a trade war but we are not afraid of one,” he said.