situation report

Aug 5, 2019 | 22:29 GMT

2 mins read

China, U.S.: Treasury Department Designates China a Currency Manipulator

What Happened: The U.S. Treasury Department has officially designated China a currency manipulator, Bloomberg reported Aug. 5.

Why It Matters: The decision came mere hours after the Chinese currency depreciated past 7 yuan to the dollar for the first time since 2008 and after U.S. President Donald Trump said he would implement a 10 percent tariff on $300 billion worth of Chinese imports starting Sept. 1. Although the White House can already use its Section 301 investigation against China to justify further tariffs, the move to label China a currency manipulator is largely symbolic and will exacerbate already rising trade tensions.

Background: Trump has long been planning to label China a currency manipulator, but the country has not fulfilled two of the three conditions the U.S. Treasury Department laid out as necessary for the designation. While China's trade surplus with the United States exceeds $20 billion, its current account surplus does not exceed 2 percent of its gross domestic product, and there is no evidence that Beijing engaged in "persistent, one-sided interventions" in foreign exchange purchases for six out of 12 months per year.

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