"Currency manipulator" accusation against China untenable, say U.S. experts

Source: Xinhua| 2019-08-13 15:48:45|Editor: Shi Yinglun
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NEW YORK, Aug. 12 (Xinhua) -- U.S. accusation of China as a "currency manipulator" does not hold water and would provide no advantages for the United States, U.S. experts have said.

The International Monetary Fund (IMF) "refused to label China as a currency manipulator," and the U.S. Treasury's accusations "don't hold up," Sarwar Kashmeri, adjunct professor of political science at Vermont-based Norwich University and fellow of the Foreign Policy Association, told Xinhua in a recent interview.

Last week, the U.S. Treasury Department designated China as a "currency manipulator" following the weakening of the Chinese currency beyond 7 yuan per U.S. dollar. The IMF then affirmed its view in a new report that China's exchange rate is broadly in line with economic fundamentals.

"The external position in 2018 was assessed to be broadly in line with the level consistent with medium-term fundamentals and desirable policies," the IMF said in a staff report after concluding the annual Article IV consultation to review the Chinese economy, consistent with its earlier conclusion in its annual External Sector Report released in July.

"With the formality of labeling China as a currency manipulator, the U.S. will have to work via the IMF. (But) this labeling diverges from the IMF's economic assessment of China," said Alexis Crow, leader of geopolitical investment practice at PricewaterhouseCoopers and senior fellow of global business and economics at Atlantic Council.

The groundless accusations against China "wield a knife" amid the ongoing trade negotiations, which "can be no advantages to the U.S., or anyone," noted Crow.

"Major European economies, notably Germany, are on the brink of recession ... Japan and Korea are managing deteriorating economic conditions -- in large part due to the external shock from trade tension," she said.

The uncertainty resulting from the U.S.-China trade disputes "is causing longer-term damage," she added.

The U.S. economy also showed signs of downside risks due to protracted trade tensions. On Sunday, Goldman Sachs lowered its forecast for U.S. economic growth for the fourth quarter, noting the trade tensions' impact on the economy worsened and the odds that trade tensions would result in economic recession were growing.

Citing that many economic indicators were not going well, Bank of America on Monday raised the chance of the U.S. economy falling into recession over the next 12 months to greater than 30 percent.

"The greater concern I have is a slowdown in the services business segment that is now occurring, and also the more conservative outlook for business environment," said Kashmeri.

"Were both these trends to continue through early next year it would certainly spell trouble for the U.S. economy," he said.

Crow expressed similar concerns. "Capital expenditure in the U.S. is waning. The trade tensions are cutting off the short legs of what was already an etiolated demand. Beyond manufacturing, services PMI is waning in the U.S.," she told Xinhua.

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