US trade negotiators push for stable RMB
(22 February 2019 - Global) US trade and tariff negotiators are requesting China to maintain the country’s renminbi (RMB) value stable and reduce continued depreciation as part of trade negotiations between the world’s two largest economies.
Officials are reviewing how to address currency policy in a memorandum of understanding (MOU) that is planned to form the basis of a deal for subsequent approval by US President Trump and Chinese Premier Xi Jinping. The bilateral ‘trade war’ has witnessed a RMB devaluation of more than five percent through 2018, raising speculation that China was deliberately weakening its currency to offset the impact of tariffs. The ‘redback’ has rebounded almost two percent in 2019 so far after touching ten year low against the ‘greenback’ in late October.
US negotiators have increasingly insisted on currency provisions in trade agreements. In July 2018 the US president stated that the RMB had been "dropping like a rock" and that it was putting the US at a "disadvantage." The renegotiated NAFTA now awaiting approval from Congress requires the US, Canada and Mexico not to engage in currency devaluations for competitive advantage. The preceding Obama administration persuaded Japan and other countries to make a similar pledge as part of its negotiations for the Trans-Pacific Partnership (TPP). President Donald Trump is reportedly becoming frustrated with his top negotiator, Robert Lighthizer.
Chinese authorities dismissed concerns in a press conference, asserting that "First, China, as a responsible major country, has made clear its position repeatedly that it does not engage in competitive devaluation.”
“Second, we will not use the RMB exchange rate as a tool amid trade disputes," said Chinese Foreign Ministry spokesman Geng Shuang. "Third, we hope the US can respect law of markets and objective facts, and refrain from politicizing exchange rate issues."
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