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Author Topic: China Won't Devalue Yuan to Boost Exports, Premier Li Says  (Read 0 times)

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China Won't Devalue Yuan to Boost Exports, Premier Li Says
« on: September 18, 2018, 11:30:02 pm »
China Won't Devalue Yuan to Boost Exports, Premier Li Says



China won’t devalue its currency in order to make its exports more competitive amid the trade war with the U.S., Premier Li Keqiang said, hours after his country retaliated against the latest increase in tariffs by the Trump administration.

“Recent fluctuations in the renminbi exchange rate have been seen as an intentional measure, but that isn’t true,” Li said in a keynote speech at the World Economic Forum in Tianjin on Wednesday. “One-way devaluation will do more harm than good to China’s economy. China will by no means stimulate exports by devaluing the yuan.”

The onshore yuan rallied as much as 0.17 percent after the comments, before paring gains to buy 6.8533 per dollar as of 12:05 p.m. in Shanghai.

Li’s comments come as trade tensions with the U.S. escalate, with both sides pledging to impose new tariffs from next week, threatening to drive the world’s two largest economies further apart. President Trump has repeatedly accused China of artificially keeping its currency weak, although his government has yet to formally class Beijing as being a currency manipulator.

As the domestic economy has slowed and fears of the impending trade war increased, the yuan has weakened. It’s lost about 8.5 percent versus the dollar over the past five months.

While policy-makers have implemented easing measures ranging from tax cuts to central-bank liquidity injections, they have refrained from broad-based fiscal or monetary stimulus for now.

Read here: China Fires Back at Trump With New Tariffs on $60 Billion

Li said that policy makers are currently facing more difficulty in keeping stable economic progress, and will now make greater efforts to prioritize employment. The government is also seeking ways to further cut taxes and fees, he said, while the central bank will stick with “prudent” monetary policy.

China has accelerated the pace of financial opening this year, seeking to lure more foreign investment as the yuan weakens and threats to output increase. Growth in the world’s second-largest economy is forecast to slow this year to 6.6 percent, slightly higher than the official target.

Li’s comments detailed measures to support the economy that have already been announced, and he didn’t directly reference the trade war tension that has spiked in recent days. He repeated the government’s position that the current global trading order centered around the World Trade Organization should be upheld.

We “must uphold multilateralism, the rules of free trade,” he said. “No matter what changes are needed to the rules, it brings benefits. If there are problems, negotiation is needed to solve them.”

— With assistance by Yinan Zhao, James Mayger, and Tian Chen



Ref. bloomberg


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