China Does Not And Will Not Use Exchange Rate As A Tool To Deal With Trade Disputes.

The US Treasury issued a statement on the morning of August 6th Beijing time, and decided to classify China as a currency manipulator. In this regard, experts believe that China adheres to the market determined exchange rate system, there is no "exchange rate manipulation" problem. China does not engage in competitive depreciation, does not use the exchange rate for competitive purposes, nor uses the exchange rate as a tool to deal with external disturbances such as trade disputes.

"The depreciation of the RMB exchange rate in August 5th was largely due to the increase in tariffs imposed by the United States on China, and the rise in the balance of payments and the pessimism of the renminbi in the market." Yu Yongding, a member of the Chinese Academy of Social Sciences, said it could be said that it was caused by the US practice and had nothing to do with the people's Bank of China.

At present, the RMB exchange rate rises or falls, which is determined by the market and is not manipulated by people. "In terms of mechanism, the RMB exchange rate is determined by market supply and demand, and there is no" currency manipulation "problem. Wen Bin, principal researcher of China Minsheng Bank, said that at present, China is implementing a managed floating exchange rate system based on market supply and demand and reference to a basket of currencies. Since the implementation of the RMB exchange rate formation mechanism reform in July 2005, we have continuously improved the quotation mechanism of the middle price, expanded the floating range of RMB against the US dollar on the basis of the middle price, expanded from 3 per cent of the initial stage of the reform to the current 2%, which can fully reflect the relationship between market supply and demand, and the marketization of the RMB exchange rate has significantly improved.

In particular, since the "8. 11" exchange reform in 2015, the two-way fluctuation of RMB has become more apparent, and the exchange rate elasticity has increased significantly, and the degree of marketization has been greatly improved. Taking the trend of RMB in 2018 as an example, the RMB exchange rate started a downward trend in the middle and late 4 months of 2018. By the end of June, it had already lost all the previous increase. In November, when the RMB exchange rate hovered at the 6.9 barrier, it rebounded strongly in December and finally recovered the lost territory. In this process, the appreciation or depreciation of the RMB exchange rate is a reflection of the expected changes in the market, rather than manipulation.

The recent "breaking 7" of the RMB exchange rate is also a reflection of China's adherence to the market determined exchange rate system. Wen Bin said that in recent times, influenced by factors such as global economic slowdown, multi central bank interest rate cuts and intensified trade frictions, the international financial market fluctuated violently, and the RMB exchange rate was also affected by the market and sentiment. This is exactly the reflection of the marketization of the RMB exchange rate.

Some people believe that the renminbi is going to fall at this time, that is, China is dealing with trade disputes with its depreciation.

"The depreciation of the RMB has no definite advantages for China." Yu Yongding said that the devaluation of the RMB has both advantages and disadvantages, and the impact is not controllable. Devaluation has too many uncertainties for China, such as the possibility of stimulating capital outflow after devaluation, which may aggravate the depreciation. In the long run, this will not be conducive to maintaining a general balance in China's foreign trade. The depreciation will also make the whole country more burdens.

From this point of view, China's initiative to guide the devaluation side effects too much, may be more harm than good. Therefore, we do not intend to let the RMB exchange rate depreciate.

Yu Yongding stressed: "China does not engage in competitive depreciation, does not use the exchange rate for competitive purposes, nor does it use the exchange rate as a tool to deal with external disturbances such as trade disputes". The three is China's policy. No country will formulate and implement policies that are uncertain about its own advantages. Therefore, deliberately guiding depreciation will not be China's choice.

"There are many ways to deal with economic and trade frictions, and the negative spillover effect of exchange rate is too much. It is not necessary for our country to take this measure." Li Yong, deputy director of the expert committee of China International Trade Association, said that China, as a responsible big country, should not only be responsible for itself, but also be responsible for its main trading partners. It is in China's interest to avoid competitive devaluation and to maintain China's cooperative relations with its major trading partners.

China has not and will not use the exchange rate as a tool to deal with external shocks. "Even after the outbreak of the Asian financial crisis, China did not choose to deal with shocks through devaluation. When the internal and external shocks are far away from the crisis, active depreciation will not be China's option. " Li Yongqiang tune.

Li Yong believes that the US accuses China of manipulating the exchange rate at this time. The unilateralism of the United States has undermined the global consensus on the exchange rate issue, which will seriously hamper international trade and global economic recovery.