China’s central bank said Tuesday that the Trump administration’s decision to label China a currency manipulator will “cause chaos in financial markets.”
“[China] has not used and will not use the exchange rate as a tool to deal with trade disputes,” the People’s Bank of China (PBOC) said in a statement, according to Reuters.
“China advised the United States to rein in its horse before the precipice, and be aware of its errors, and turn back from the wrong path,” the statement continued.
The bank’s comments come one day after the Treasury Department designated China a currency manipulator for allowing the yuan to cheapen beyond the key level of seven-per-dollar for the first time since 2008, prompting the U.S. Treasury to designate the manipulator label, BBC reported. (RELATED: Trump Won’t Allow Tariff Relief For Apple)
Chinese President Xi Jinping and U.S. President Donald Trump attend a welcoming ceremony November 9, 2017 in Beijing, China. Trump is on a 10-day trip to Asia. (Photo by Thomas Peter-Pool/Getty Images)
“In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past,” the Treasury Department’s Tuesday statement read.
“The context of these actions and the implausibility of China’s market stability rationale confirm that the purpose of China’s currency devaluation is to gain unfair competitive advantage in international trade,” the statement continued.
PBC said the fall of the yuan was the result of “unilateralism and trade protectionism measures and the imposition of tariff increases on China” in its statement. A weak yuan can make Chinese exports more competitive or cheaper for foreign countries to purchase, which could potentially offset increased tariffs, according to the BBC.
Trump increased tariffs on China to 10% on $300 billion worth of Chinese goods, imposing duties on nearly all Chinese imports into the U.S., amid an escalating trade war between the two countries. (RELATED: Vietnam Says Some Chinese Exporters Are Using Fake ‘Made-In-Vietnam’ Labels To Avoid US Tariffs)
“Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%,” the president tweeted Aug. 1.
“We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!” his tweet continued.
…We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!
— Donald J. Trump (@realDonaldTrump) August 1, 2019
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