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Abacus | The real danger behind US currency manipulation charges against China
- Washington’s decision to slap the label on Beijing opens a new front in the simmering US-China cold war
- In the long term, this is likely to accelerate the uncoupling between the world’s two largest economies, writes Tom Holland
Reading Time:4 minutes
Why you can trust SCMP
The Chinese government doesn’t generally get – or deserve – much sympathy, but you almost have to feel for Beijing on this one.
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Last Monday, Chinese policymakers briefly stopped manipulating the exchange rate of the yuan, and within 24 hours the United States had turned around and formally designated them currency manipulators – a designation Beijing has long been anxious to avoid, and that Washington has long withheld from making.
In truth, the currency manipulator label doesn’t actually mean that much. In theory, its award starts a process lasting six months to a year that may result in Washington imposing some token sanctions that would be irrelevant in the case of China anyway.
But as a further rung down on the ladder of deteriorating US-Chinese relations, the manipulation row is ominously significant. It pretty much buries any hope that the resumption of trade talks agreed by Donald Trump and Xi Jinping at the late-June G20 meeting in Osaka will lead to any deal on bilateral trade this year, or next.
What’s more, it opens a third front in the simmering US-China economic cold war. Not only are the world’s two largest economies at odds over trade tariffs and advanced technologies, they are now increasingly threatening to carry the conflict over into the monetary sphere.
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