Australian economists refute U.S. accusation of China's "currency manipulation"

Source: Xinhua| 2019-08-07 14:42:06|Editor: ZD
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CANBERRA, Aug. 7 (Xinhua) -- Some Australian economists rejected the accusation by the United States that China manipulates its currency.

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

He told Xinhua that even the U.S. government's own Treasury Department recently concluded that China was not a currency manipulator, an assessment supported by international bodies such as the IMF.

"Ironically, the U.S. is now saying that unless China intervenes to strengthen its currency then it will be declared a manipulator. This is plainly contradictory," he said. "It's unfortunate when economic facts and evidence are sidelined in favor of political expediency."

Peter Drysdale, head of the East Asian Bureau of Economic Research at the Australian National University, also believed that China is not manipulating its currency.

"Neither the IMF nor the U.S. Treasury itself considers the RMB undervalued," the professor told Xinhua. "Letting the exchange rate edge down is in line with market pressure around the weakening Chinese economy," he said. "The movement of the Chinese currency is in line that of the Australian dollar for example."

He warned that the escalation of trade friction between China and the United States will wreak considerable damage on global economy. "If the trade war were to continue to escalate, investment, production and employment will all be affected negatively and we could expect a serious global recession with a cut in global GDP upwards of 5 percent not the modest 1-percent cuts predicted earlier," he said.

The Australian newspaper carried a commentary on Wednesday, saying, "It is the height of absurdity to call China a currency manipulator."

"The rest of the world is telling China it needs to open up its markets, yet when it allows a minor drop in its currency, it is accused of manipulation by a country that has a freely floating exchange rate," said the article.

"Australia has seen its currency fall from parity with the U.S. dollar to below U.S. 70c in the past few years, making our exports far more competitive. Is that currency manipulation by the Reserve Bank, or just world markets adjusting expectations downwards about our economy?" it asked.

"If anything, China has been artificially keeping its exchange rate too high because of its overriding commitment to 'stability'," the article said.