Macroscope | Why the gloom? As ‘dealmaker’ Trump pivots on China, things are looking up
‘If the region as a whole does well, China is well-placed to benefit’
Given the critical tone towards China that was evident in US President Donald Trump’s campaign rhetoric, it might have appeared a far-fetched notion that a few months into a Trump presidency China-US economic relations would still be on an even keel and the broader outlook for the Chinese economy seem relatively rosy. But such is the case.
The Florida summit between Trump and his Chinese counterpart Xi Jinping appears to have gone smoothly. Indeed only last week Trump, who had previously been very vocal about China’s policies towards the yuan, said China were “not currency manipulators”, a stance confirmed in an official report from the US Treasury on April 14.
All things considered, the outlook for China’s economy currently looks reasonably rosy
In fact, Friday’s publication of the US Treasury’s latest semi-annual “Report to Congress on the Foreign Exchange Policies of Major Trading Partners of the United States” actually acknowledged that “China’s recent intervention in foreign exchange markets has sought to prevent a rapid [yuan] depreciation that would have negative consequences for the United States, China and the global economy”.
The US “Treasury estimates that from August 2015 through February 2017, China sold around US$800 billion in foreign currency assets to prevent rapid [yuan] depreciation”.
But the report also added that the US Treasury “will be scrutinising China’s trade and currency practises very closely, especially in light of the extremely sizeable bilateral trade surplus that China has with the United States”.
Nevertheless, it would seem the currency issue has again been parked.
