China: Mnuchin warns about devaluing its currency

 Treasury Secretary Steven MnuchinSpencer Platt/Getty Images

As trade tensions between the world’s largest economies continue
to escalate, the US has warned China not to weaken its currency
as an alternative to tariffs.

“As we look at trade issues there is no question that we
want to make sure China is not doing competitive devaluations,”

Treasury Secretary Steve Mnuchin told the Financial Times in
an interview published Wednesday. 
“We are
going to absolutely want to make sure that as part of any trade
understanding we come to that currency has to be part of
that.”

The Chinese yuan has continued to slide after
the 

Bank
of China on Sunday

 cut
its reserve requirement ratio, or the amount of money
commercial banks have to store. It has shed more than 6% in value
this year and is approaching a key level of seven per dollar,
marking its weakest point since 2008.

A trade war with the US has added to concerns about an already
slowing economy, raising questions about how far the central bank
might let the yuan fall. A weaker currency typically boosts
exports.

The Trump administration has
imposed tariffs on $250 billion worth of Chinese goods,
prompting Beijing to retaliate. The president said this week he
is prepared to place duties on all imports from China if trade
tensions continue. 

On the campaign trail, Trump had repeatedly vowed to label
China a currency manipulator. But the US Treasury
has 
declined to do so several times this year
in semiannual
reports on the foreign exchange policies of major
trading partners. 

The next Treasury report on China’s currency is due next
week. 

MI