Is China A "Qualified" Currency Manipulator?

In the long run, anti globalization and excessive mercantilism are not consistent with the laws of human social economic development. In the long run, globalization is still unstoppable.

The trade issue between China and the United States will ultimately be solved through a rational and pragmatic attitude.

Before and after Trump took office, there was a wave of US trade sanctions against China.

As for whether China is a currency manipulator, the US attitude seems very strong, and advocates that China should be regarded as a currency manipulator.

Will there be a trade war between China and the United States? This issue will have a crucial impact on Sino US economic and trade relations, as well as on China US relations and even the global economy.

In fact, in recent years, the US trade protectionist measures toward China have been continuously strengthened, and trade frictions between China and the United States have been escalating.

Since 2008, the United States has promulgated a large number of trade protectionist measures, which are mainly non-tariff barriers, including the so-called double opposition, namely anti-dumping and countervailing. There are more than 2200 items, most of which are related to China. About 100 non-tariff wall measures are totally against China.

China has also had counter measures, and has taken a series of measures against the United States, but its scale and intensity are much smaller than that of the United States. There are fewer than 50 targets directed at the United States.

Before and after taking office, Trump clearly pointed out that China is a currency manipulator.

If this is true, trade sanctions and anti sanctions between China and the US will be on a new stage, and even a comprehensive trade war may erupt.

The question now is whether China is "qualified" according to US standards.

Country of manipulation.

In 2015, the United States promulgated the "

And the trade enforcement act "stipulates that three conditions must be satisfied at the same time as a currency manipulator.

First, there is a huge surplus in goods trade in the United States, at least a year in excess of 20 billion dollars; two, the current account surplus accounts for more than 3% of GDP.

The three is continuous one-way purchase of foreign exchange, in fact, is to weaken the currency or control appreciation.

To look at these three conditions, China has only met one of them, that is, the trade surplus with us goods is larger than that of US $20 billion.

In 2016, China's trade surplus with the United States reached $about 250000000000, and the surplus in 2011 exceeded 200 billion US dollars.

But the other two obviously do not conform to what the United States calls the standard.

By the end of 2016, China's current account surplus was only 2% less than GDP.

In the past six years, only 2015 have been slightly more than 3%, and other years are basically below 2%.

In view of the continuous purchase of foreign currency in one direction, it has happened in the past, but the past three years have already changed.

The present situation is just the opposite.

Due to the expectation of continued depreciation of RMB and the pressure of outflow of capital, China's monetary authorities have done a great deal of reverse operation, that is, net foreign exchange to the market rather than net purchase.

To maintain a stable market exchange rate and avoid excessive devaluation of the RMB.

Because of this, China's foreign exchange reserves decreased by US $512 billion 700 million and US $319 billion 900 million in 2015 and 2016 respectively.

It can be seen that the reality of China is far from the two standards.

In October 2016, the US Treasury issued a report that China only met the first item in the three standards, that is, the trade surplus with the United States was relatively large, and the other two did not meet the requirements.

But at the same time, the US Treasury listed China as a watch list for currency manipulation countries.

It is obvious that China must be beaten.

The evidence of manipulation countries is seriously insufficient. According to the US standard, China is not "qualified"; unless the United States substantially adjusts the relevant standards and conditions, it is objectively and very difficult.

Apart from China, the list includes Japan, Germany, South Korea, Switzerland and Taiwan, China.

In fact, these countries and regions have met two criteria.

For example, Japan, South Korea and Germany have a relatively large surplus in goods trade with the United States, while current account accounts for more than 3% of GDP.

Switzerland and Taiwan, China, account for a relatively large proportion of current account items and continue to buy dollars in the foreign exchange market.

In recent years, the RMB exchange rate has been assessed by IMF. It is believed that there is no underestimation of the RMB and that the renminbi is basically the same as the fundamentals of China's economy.

In the October 2016 report, IMF clearly pointed out that the real effective exchange rate of RMB has a certain degree of overestimation.

That is to say, from the perspective of real effective exchange rate, the RMB should not only appreciate, but also moderate depreciation.

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