China Will Not Purposefully Devalue the Yuan, Premier Li Keqiang Says
"China will by no means stimulate exports by
devaluing the yuan," Chinese Premier Li Keqiang said in a speech at the World Economic Forum in
Tianjin, China on Wednesday, after months of speculation over whether the Chinese
government intended to offset the effects of U.S. tariffs on Chinese imports by
"competitive devaluation" of the exchange rate.
Since April of this year, the renminbi has lost around 9 percent of its value against the dollar.
"Recent fluctuations in the renminbi exchange rate have been seen as an
intentional measure, but that isn't true," Premier Li said. "One-way devaluation will do
more harm than good to China's economy."
As Reuters reports, in recent months, China's central bank has been intervening to stabilise
the currency, including by reintroducing a "counter-cyclical factor" in daily yuan fixing
to counter the bias toward a weaker yuan. Writing
last week, Deborah Elms of the Asian Trade Centre in Singapore discussed why
she believes China won't devalue its currency in an article for China-US Focus. "The fall of the
currency can also be seen as a natural byproduct of the escalating trade war. .
.In response, it appears that the Chinese government is now trying to stabilize
the situation, rather than allow the currency to continue to depreciate," she
Premier Li's comments came two days after
President Donald Trump placed additional tariffs of 10 percent on roughly $200 billion of imports from China, which will take effect next Monday. In a White House statement announcing the new
tariffs, President Trump said, "We have been very clear about the type of
changes that need to be made, and we have given China every opportunity to
treat us more fairly. But, so far, China has been unwilling to change its
practices." In response, China's Finance Ministry announced that it had "no choice" but to levy tariffs on about $60 billion worth of U.S. imports — leaving
international spectators speculating whether the U.S. president will follow through on his threat to place
tariffs on roughly all U.S. imports of Chinese goods.
U.S Sanctions China for Russian Weapons Purchase
The U.S. State Department announced Thursday that
it would impose sanctions against the Chinese military for its purchase of
Russian military equipment. In the official statement, American diplomatic
officials noted, "Today's actions are not intended to undermine the
military capabilities or combat readiness of any country but rather
to impose costs on Russia in response to its interference in the United States
election process, its unacceptable behavior in eastern Ukraine, and other
According to Reuters, the sanctions were imposed on China's Equipment
Development Department (EDD) for its purchase of 10 SU-35 combat aircraft in 2017 and S-400 surface-to-air
missile system-related equipment in 2018, which the State Department
said violated U.S. sanctions on Russia. This move also blocks the EDD, and its director Li Shangfu, from doing
business with any U.S. entities. The penalties were applied under the 2017 Countering America's Adversaries Through Sanctions Act,
passed by the American legislature to punish Russia's continued involvement
in conflicts in both Ukraine and Syria.
In addition to the impositions against the Chinese military, 33 Russians were
added to the act's blacklist, expanding the total to 72 individuals personally
sanctioned for undertaking transactions with Russian intelligence and military
On Friday, China's Foreign Ministry Spokesman
Geng Shuang protested the sanctions, saying, "The U.S. has seriously violated the basic norms of
international relations and disturbed the relationship between China
and the U.S. We strongly call on the U.S. to remedy the mistake and cancel the
sanctions. Otherwise, the U.S. has to bear the consequences." China will
continue its defense cooperation with Russia as well as the development of
strategic ties with the Eurasian power, he said.
Third Inter-Korean Summit Focused on Denuclearization
The third inter-Korean summit took place this week.
South Korean President Moon Jae-in arrived in North Korea
on Tuesday, the first visit by a South Korean leader to the North Korean capital in 11 years. North Korean leader Kim
Jong Un and President Moon greeted each other with
smiles and a hug, as crowds of North Koreans waved flowers and national and
unification flags. The focus of the summit was denuclearization,
easing the military standoff, and improving ties between the North and South.
According to the The Wall Street Journal, on Wednesday, Kim and Moon
concluded a private meeting with a news conference during which "they
reaffirmed their goal of ridding the Korean Peninsula of nuclear weapons." Kim
will allow inspectors and experts to oversee the dismantling of North Korea's
Sohae satellite launching facility and will also permanently deactivate its
Yongbyon nuclear-enrichment facility.
But, there's a catch. Both Kim and Moon are looking to the United
States to take reciprocal action, as Kim will not deactivate North
Korea's nuclear-enrichment facility unless certain conditions are met. One such
condition is that the United States agrees to
certain concessions, which were not explicitly mentioned. So far, President
Trump has reacted minimally, but positively. He told reporters at the White
House on Wednesday that there was "very good news from
North Korea, South Korea." He is expected to meet with President Moon on Monday
during the annual United Nations General Assembly; if Moon can prove that there
was real progress, then Trump may be persuaded to arrange a second
meeting with Kim.
The Fallout of the U.S. China Trade War: New Video
With the trade war intensifying, American
leaders and businesses are raising concerns and discussing possible solutions
to this ongoing struggle. "The American strategy should be to pick the U.S. up,
not to hold China down," says former U.S. Treasury Secretary Larry Summers, who
believes the U.S. should invest in infrastructure, boost commitments to basic
science education and develop the education system in order to support
employment growth in the U.S.
In bold letters at the top of the U.S. Chamber
of Commerce's website are the words, "Trade works. Tariffs Don't." The chamber
predicts that these tariffs will cause "extremely significant damage" to
conservative-leaning states, including Idaho, South Dakota, Alaska, Louisiana,
Alabama and South Carolina, and American businesses like Harley-Davidson and
General Electric. In our latest video, China-US Focus explores what American
business leaders and experts, including International Monetary Fund director
Christine Lagarde, think about the trade war and the impact of the tariffs on
businesses. Watch the full video here.