Taiwan, Germany, Switzerland, Japan and South Korea are still listed in foreign exchange observation, the United States calls for reducing trade surplus

The mainland’s foreign exchange reserves fell by US$14.7 billion in September, and foreign capital flight has accelerated.

The U.S. treasury department announced on april 14 (local time). the release of a report on foreign exchange of key china,taiwan,germany,switzerland,japan,s-korea.

on the watch list and encourage these countries to take specific policy action to reduce excessgoods in united states.

U.S. report criticizes the CCP but does not refer to currency manipulation

According to the Central News Agency, the U.S. Treasury Department published a report on the foreign exchange policies of major trading partners. Although it did not list the CCP as a currency manipulator.it criticized China’s monetary policy for causing difficulties for U.S. labor and companies. China also restricted imported goods from entering the market and foreign investment activities.

During the campaign of US President Trump,he publicly stated on many occasions that he declared China.a currency manipulator on the first day of his term. Although the report did not list China as a currency manipulator, his language on the official manipulation of the RMB exchange rate was rather tough. According to the report, records show that the CCP continues to intervene in exchange rate transactions on a large scale and one-way. In the past 10 years, even with the increase in trade volume and trade surplus, it has resisted the appreciation of the renminbi. China only allowed the renminbi to appreciate gradually, which caused the currency to be undervalued for a long time and needed a longer time for correction.

The report pointed out that the CCP’s monetary policy has caused serious and long-term difficulties for American labor and companies. In addition China continues to restrict the channels through which imported goods and services enter the market and strictly restrict foreign investment activities.

The report’s comments on Taiwan are not much different from the previous one. The U.S. Treasury Department urges Taiwan to continue to adjust its policies. Only under exceptional conditions of market disorder can it intervene in foreign exchange to a limited extent and increase the transparency of its intervention in the foreign exchange market and foreign exchange deposits.

Taiwan was once again listed as a foreign exchange manipulator watch list by the United States. On the 15th the head of the Central Bank of the Republic of China said that he “knowledges” about the renewal of the watch list and treats it with a calm mind. It has no real impact on Taiwan. He emphasized that the communication channel with the US Treasury Department is smooth , Will continue to communicate.

Also Read : Oracle v. Google case is about basic constitutional rights

Agence France Press reported that this is the first time the Trump,administration has reported to Congress on the foreign exchange policy of a US trading partner continuing the position of the previous Obama administration, but with a harsher tone. Unlike the previous administration’s final report in October. the Trump administration’s latest semi-annual report urges these countries to seek specific policy actions to reduce their trade surplus with the United States.

The United States has identified three criteria as a currency manipulator, and the mainland only meets one of them: a huge trade surplus with the United States; while Germany also meets the second: the current account surplus accounts for more than 3% of gross domestic product (GDP). The mainland has not recently stepped into the market to devalue the renminbi, which means that it does not meet the third criterion, and has tried to prevent further devaluation of the renminbi when the national economic growth rate is relatively weak.

In the face of the mainland’s US$347 billion in goods trade surplus with the United States. last year and continued policies that restrict free trade and foreign investment. “the U.S. Treasury Department will closely monitor China’s trade and currency practices.” The huge goods surplus “highlights the need to further open the Chinese economy to the US goods and services industry, as well as accelerate reforms to rebalance the Chinese economy and move towards expanding household consumption expenditure.” Even if the renminbi starts to appreciate again, the mainland still needs to prove that the recent stance of not attempting to lower the exchange rate of the domestic currency is a “lasting policy change.”

As for Germany the US Treasury Department said that Germany should take action. especially its spending policy to “stimulate stronger growth in domestic demand”. Trading partners and the International Monetary Fund (IMF) have been calling for this for some time. Increasing demand “will put upward pressure on the euro and help reduce huge external imbalances and increase domestic consumption including imported goods. These imbalances include a surplus of US$65 billion in goods trade with the United States last year, and what the Treasury Department called “the world’s largest current account surplus of nearly US$300 billion.”

Reuters reported that the U.S. Treasury Department report also called on Japan to take more actions to “invigorate domestic demand and combat low inflation, while avoiding a return to export oriented growth”. This will include more “flexible” government spending policies, as well as continued reforms to improve the labor market and strengthen Japan’s economic productivity.

Radio Korea International reported that on the 14th local time the U.S. government. included South Korea in the list of exchange rate observers and did not designate China as a currency manipulator . The U.S. Department of the Treasury sets up a list of exchange rate policy monitoring twice a year, with three criteria: the trade surplus with the United States exceeds 20 billion U.S. dollars; the current account surplus of the economy accounts for more than 3% of the gross domestic product (GDP); the economy Continue to unilaterally intervene in the exchange rate market.

Leave a Comment