Day: July 2, 2020

By JinSheping (Peoples Daily)18:11, August 08, 2019

On August 5, both onshore and offshore exchange rate of the Chinese yuan broke 7 against U.S. dollar.

It was in fact a natural market response to the changes in the international financial market and other external factors such as the U.S. claim last week to impose an additional 10 percent tariff on $300 billion worth of Chinese imports.

However, some American politicians are taking advantage of this and making hypes. On August 6, the U.S. Department of the Treasury designated China as 鈥渁 currency manipulator鈥?

Such act of the U.S., which harms others without benefiting itself, would not only wreak havoc on the international financial order and cause turmoil in global financial market, but also severely hinder international trade and the recovery of global economy. Eventually, the U.S. itself will become a victim of the consequences.

It is easy to find a stick to beat a dog just as the U.S. can always find faults with China when it wants to smear the latter.

On one hand, the U.S. is wielding the big stick of tariffs against global countries, causing them to suffer drastic fluctuations in exchange rates; on the other hand, it is willfully labeling countries 鈥渃urrency manipulators鈥? forcing them to accept the so-called 鈥渞easonable exchange rates鈥?designated by the U.S.

These evil actions of the U.S. revealed the country鈥檚 pursuit of unilateralism and protectionism, reflecting the arrogance and arbitrariness of Washington.

Anyone sensible can understand why the Chinese currency has broken the level of 7 yuan per U.S. dollar.

On August 1, the U.S. unilaterally announced that it would impose an additional 10 percent tariff on $300 billion worth of Chinese goods, which seriously breached the consensus reached by the heads of state of China and the U.S. in Osaka, Japan.

The move frustrated the global market鈥檚 expectations toward the relieving of China-U.S. economic and trade frictions, and became a blasting fuse of the fluctuation in yuan exchange rate.

Economic and trade frictions affect international trade which in turn has an impact on exchange rate. Such fluctuation is driven and determined by market forces and will never be 鈥渕anipulated鈥?

Some developed countries, including the U.S., have constantly demanded China to make yuan exchange rate more flexible since long ago. However, when the yuan exchange rate becomes increasingly market-based and its frequency of fluctuation increases accordingly, some Americans immediately flip-flopped and accused China of 鈥渕anipulating鈥?exchange rate. It only reflected their absurdity.

Not able to find any actual evidence for their false allegation against China, the U.S. Department of the Treasury turned to the answers offered by the People鈥檚 Bank of China (PBOC) during a regular news briefing on August 5.

The statement by the PBOC 鈥渋s an open acknowledgement by the PBOC that it has extensive experience manipulating its currency and remains prepared to do so on an ongoing basis鈥? said the U.S. Department of the Treasury.

The exchange rate of currency is determined by the market, but it cannot be left completely unattended. No country in the world today is adopting a laissez-faire attitude towards its sovereign currency.

As a competent authority of China鈥檚 foreign exchange policies, the PBOC has always been committed to maintaining the basic stability of yuan exchange rate and keeping it stable at a reasonable and balanced level.

Not just has China never manipulated exchange rate, in fact, the country has always regarded marketization as a goal of its foreign exchange reforms.

What China adheres to is a market-oriented and managed floating exchange rate system which is formulated in reference to a basket of currencies. Therefore, market supply and demand plays a decisive role in the formation of the yuan exchange rate.

As a responsible major country, China has reiterated on many occasions that it will never pursue competitive devaluation or use yuan exchange rate as a tool to deal with external disturbances including trade frictions.

Despite the recent depreciation of the yuan against U.S. dollar, the value of yuan has been generally rising from a historical perspective.

From the beginning of 2005 to June 2019, the nominal effective exchange rate of yuan appreciated by 38 percent and the real effective exchange rate of the currency by 47 percent, which made yuan the strongest currency among those of the Group of 20 (G20) economies.

Besides, it is also the currency that witnessed one of the greatest appreciations around the world, as revealed by the data from the Bank for International Settlements.

As China enjoys a basic equilibrium in the balance of international payments and has sufficient foreign exchange reserves, plus the country is seeing a continuous momentum of sustainable and sound economic development, it is totally able to maintain the stability of yuan exchange rate.

In addition, it is hardly possible to label China a 鈥渃urrency manipulator鈥?even it is under the U.S. criteria, which is interesting.

According to the present definition of a currency manipulator given by the U.S. Department of the Treasury, a country needs to meet multiple quantitative criteria at the same time before it is labeled a currency manipulator.

The country鈥檚 current account surplus has to be equivalent to 2 percent of its GDP, and its foreign exchange bought through exchange rate intervention shall exceed 2 percent of its GDP.

However, China鈥檚 current account surplus in 2018 was only 0.37 percent of its GDP. Besides, the country has neither made massive purchases of foreign exchange nor obtained competitive advantages in trade via exchange depreciation.

Disregarding the facts and calling white black, the U.S. just wants to see China cave in to its extreme pressure and intimidation and make concessions in bilateral economic and trade consultations with the U.S., so that it can gain more.

China, though always advocates for resolving problems through dialogue and consultation based on equality and mutual respect, is never afraid of any forms of extreme pressure.

With steady economic development and prudent financial development, China is strong enough to handle any impact and attack.

The attempts of some Americans to put a spoke in China鈥檚 wheel of development by fabricating false accusations against the country such as labeling it 鈥渁 currency manipulator鈥?could not, cannot, and will not succeed.

Such attempts would not help solve any problems. The U.S. side had better respect the market rules and facts, and return to the right track of rationality and objectivity, rather than make troubles that would fan up the flames of the economic and trade frictions with China.

(Xinhua)18:18, August 08, 2019

HARBIN, Aug. 8 — An international port trade expo opened Thursday in the city of Suifenhe along Chinas border with Russia in the northeast province of Heilongjiang.

Covering an area of 30,000 square meters, the 7th China International Port Trade Expo has attracted more than 450 companies from over 10 countries and regions, including Russia, France and Germany.

Economic and trade negotiations, as well as foreign exchange activities, will also be held during the four-day event.

As Heilongjiangs major port, Suifenhe has both railways and highways leading to Russia. Official data showed that the port handled 1.11 million passengers and 10.52 million tonnes of cargo last year.

(Xinhua)07:14, August 09, 2019

BEIJING, Aug. 8 (Xinhua) — Chinas foreign trade maintained steady expansion in the first seven months of this year amid mounting domestic and external challenges.

Chinas trade of goods rose 4.2 percent year on year in the January-July period to 17.41 trillion yuan (about 2.49 trillion U.S. dollars), data from the General Administration of Customs (GAC) showed Thursday.

Exports increased 6.7 percent year on year to 9.48 trillion yuan during the period, while imports grew 1.3 percent to 7.93 trillion yuan. China saw its trade surplus widen by 47.4 percent year on year to 1.55 trillion yuan during the same period.

In July alone, exports expanded 10.3 percent from a year ago to 1.53 trillion yuan, while imports went up 0.4 percent to 1.21 trillion yuan, leading to a 310.26-billion-yuan surplus, widening by 79 percent.

The steady trade growth came as the Chinese economy maintained strong resilience and sound fundamentals and at a time when internal and external risks and challenges were increasing, said Li Kuiwen, director of the GACs statistics and analysis department

Meanwhile, Chinas trade mix continued to optimize as general trade with the long industrial chain and high value-added reported a higher proportion in the total trade since the beginning of this year, Li added.

General trade grew 5.7 percent year on year and accounted for 59.8 percent of the total trade in the January-July, 0.8 percentage points higher than the same period of last year.

The European Union remained Chinas largest trading partner in the period, with bilateral trade volume up 10.8 percent from one year earlier to 2.72 trillion yuan, followed by the ASEAN, up 11.3 percent to 2.35 trillion yuan, and the United States, down 8.1 percent to 2.1 trillion yuan.

Chinas trade with Belt and Road countries totaled 5.03 trillion yuan, up 10.2 percent year on year, six percentage points higher than the overall pace, said the GAC, adding that the amount accounted for 28.9 percent of Chinas total trade volume.

Chinas private businesses reported faster trade growth in the first seven months, with the trade volume increasing 11.8 percent to 7.31 trillion yuan. The amount accounted for 42 percent of the total trade volume in the period, up 2.9 percentage points year on year.

Thursdays data also showed that exports of mechanical and electrical products, as well as labor-intensive products such as textile and furniture, have all maintained growth in the period.

In addition, imports of crude oil and natural gas saw an increase, while iron ore and soybean imports dropped.

(Xinhua)07:14, August 09, 2019

BEIJING, Aug. 8 (Xinhua) — The U.S. decision to designate China a currency manipulator on Monday is ill-founded, experts have said.

The U.S. labeling follows the weakening of the Chinese currency beyond 7 yuan per U.S. dollar on Monday. Chinas central bank attributed the yuan devaluation to factors including unilateral and protectionist measures, as well as the expectation of additional tariffs on Chinese goods.

Countries are measured for manipulation based on a significant bilateral trade surplus with the United States, material current account surplus, and persistent, one-sided intervention in foreign exchange markets, according to the 2015 U.S. Trade Facilitation and Trade Enforcement Act.

China still doesnt meet Treasurys criteria for manipulation, said Eswar Prasad, a professor at Cornell University. Treasury has made what seems like an arbitrary determination of currency manipulation since China hardly meets all of the relevant criteria and despite the dilution of those criteria over time.

In purely currency terms the Administrations reasons dont hold up, said Sarwar Kashmeri, an adjunct professor of political science at Vermont-based Norwich University.

Many people in the private sector may not conclude it is a currency manipulator, Marc Chandler, chief market strategist at the Ohio-based capital markets trading firm Bannockburn Global Forex, told reporters.

The key rule is (China is) not intervening consistently or persistently to weaken the currency, Chandler said, noting that the U.S. move wont stand up in the court of public opinion.

The groundless and fabricated accusations that China is manipulating its currency against other currencies are a sign of paranoia and Sinophobia, said Joseph Matthews, a senior professor at the BELTEI International University in Phnom Penh.

All the sovereign currencies in the world are being affected by the national and international market forces on a daily basis, and thus being adjusted accordingly, he told Xinhua. Claiming that China is manipulating its currency is an absolutely ridiculous and hilarious claim.

The U.S. designation of China as a currency manipulator says far more about U.S. politics than Chinas economic policies, said James Laurenceson, acting director of Australia-China Relations Institute at the University of Technology Sydney.

In a May 2019 report to Congress, even the U.S. Treasury said it has found that no major trading partner, including China, met all three criteria for currency manipulation during the four quarters ending December 2018.

This is plainly contradictory, Laurenceson said. Its unfortunate when economic facts and evidence are sidelined in favour of political expediency.

China is not interested in depreciating its currency, said Horst Loechel, a professor of economics at Frankfurt School of Finance Management.

Loechel said the recent developments are bad news for global markets, which may lead to uncertainty, instability, and concerns, as investors may withdraw their money from the market and invest in safe havens instead.

(Xinhua)07:22, August 09, 2019

China firmly supports relevant Chinese companies to take up legal measures to safeguard their legitimate rights and interests, and will continue to take all necessary measures to resolutely safeguard those rights, a Foreign Ministry spokesperson said Thursday.

According to reports, the U.S. General Services Administration on Wednesday issued an interim regulation, prohibiting its federal agencies from purchasing telecommunications equipment and services from five Chinese companies, including Huawei, in accordance with the U.S. National Defense Authorization Act (NDAA) for Fiscal Year 2019.

Spokesperson Hua Chunying, when responding to a relevant question, expressed Chinas strong dissatisfaction with and resolute opposition to the US practice of taking discriminatory and unfair measures on specific Chinese companies based on China-related negative content of its 2019 National Defense Authorization Act.

We have noticed that relevant Chinese companies had already taken legal actions in the United States, she said.

Hua said that by abusing state power, the United States has deliberately discredited and suppressed specific Chinese enterprises, seriously damaged its own image and interests, and severely undermined the global industrial chain and supply chain.

It has been and will continue to be widely opposed and resisted by countries around the world, she added.

We urge the U.S. to abandon the Cold War mentality and the zero-sum game mindset, stop politicizing trade issues, stop the unreasonable suppression of Chinese enterprises and do more things to promote the healthy and stable development of China-U.S. trade cooperation, Hua said.