President Donald Trump said Sunday he has no reason to punish China for its currency management practices as long as they are willing to help rein in North Korea.
Why would I call China a currency manipulator when they are working with us on the North Korean problem? We will see what happens!
— Donald J. Trump (@realDonaldTrump) April 16, 2017
Since the president took office, North Korea has conducted five missile tests and launched eight ballistic missiles. The reclusive regime has also tested high-thrust rocket engines for a potential intercontinental ballistic missile, and it looks like the North may soon conduct a sixth nuclear test.
Trump is determined to resolve this foreign policy crisis.
Trump said the Chinese “are not currency manipulators,” in a Wednesday interview with the Wall Street Journal, stepping back from past accusations that the Chinese are the “grand champions at manipulation of currency.”
China is the largest source of the U.S. trade deficit, and Trump has previously criticized China for unfairly devaluing its currency to give it an unfair competitive advantage in international markets. At the same time, the president also sees China as essential for resolving the North Korea problem that has puzzled world leaders for decades.
“It’s a very dangerous situation, and China can end it very quickly in my opinion,” Trump told Reuters in February, adding. “I think China has tremendous control over North Korea, whether they say so or not. They could solve the problem very easily if they want to.”
During their discussions in Mar-a-Lago recently, Trump encouraged Chinese President Xi Jinping to rein in the actions of its hostile neighbor in exchange for a favorable trade policy.
I explained to the President of China that a trade deal with the U.S. will be far better for them if they solve the North Korean problem!
— Donald J. Trump (@realDonaldTrump) April 11, 2017
The president also left the possibility of unilateral U.S. action, a move largely considered undesirable by the Chinese, sitting on the table. The Chinese want to be involved in the process.
North Korea is looking for trouble. If China decides to help, that would be great. If not, we will solve the problem without them! U.S.A.
— Donald J. Trump (@realDonaldTrump) April 11, 2017
Had a very good call last night with the President of China concerning the menace of North Korea.
— Donald J. Trump (@realDonaldTrump) April 12, 2017
While China does engage in unfair trade practices, such as protectionism and the financing of companies with state funds, currency manipulation appears to be less of a problem now. In fact, there is evidence to suggest China may be trying to prop up the Chinese currency to prevent capital outflows detrimental to the slowing Chinese economy.
Trump may still decide to go after China on trade if the latter fails to uphold its end of the bargain on North Korea. As he said in his tweet, “We will see what happens.”
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