Trump’s potshots at yuan on campaign trail unlikely to escalate into full currency attack, say experts

When Donald Trump called China the “greatest” currency manipulator 3 ½ months ago, few in Beijing bothered to respond to his comments. At the time, Trump appeared to have a slim chance at taking the White House, and promises and threats made on the campaign trail are often neglected when the dust settles.

Now, with Trump’s surprising victory in the US election, Beijing will have to take his comments regarding the yuan seriously and prepare for a scenario where he might ask the US Treasury to label China as a currency manipulator.

“Trump’s comments on issues like the yuan lack credibility – he was talking wildly,” said Yuan Zheng, an expert on US affairs at the Chinese Academy of Social Sciences. “But he surely has a tendency towards protectionism, and he will do something [about the exchange rate] after he assumes the presidency.”

The grumbling out of Washington about the yuan is nothing new. Complaints about the exchange rate started about a decade ago with a succession of US Treasury secretaries taking aim at the renminbi – John Snow, Henry Paulson, Timothy Geithner and Jack Lew all pressed Beijing during their term to adopt a market-decided exchange rate and reduce intervention.

Despite repeated threats, the US has never officially labelled China a currency manipulator, a step that could lead to blanket restrictions on Chinese trade.

And although Trump has fired a warning shot, he is unlikely to take any immediate action.