China has no intention of weakening its currency to help exporters and will not engage in any form of “competitive devaluation” of its exchange rate, Chinese Premier Li Keqiang said on Wednesday, a day after the latest tit-for-tat measures in the US trade war, South China Morning Post reported.
Li told the World Economic Forum in Tianjin that Beijing had not manipulated the exchange rate of the yuan to cope with trade tensions, rejecting speculation that the Chinese government deliberately engineered the 8 per cent depreciation of the yuan seen since March to offset the effects of US tariffs on Chinese imports. “Some people think China deliberately [devalued the yuan]; this is groundless,” Li said, in an indirect response to US President Donald Trump’s allegations that Beijing is manipulating its currency. The yuan exchange rate barely moved both in the onshore market in Shanghai and the offshore market in Hong Kong after Li’s speech. The onshore exchange rate closed at 6.8548 per dollar on Wednesday.
Meanwhile, China is expected to refrain from a large devaluation as such a move could trigger capital outflows that would undermine China’s financial stability and even “competitive devaluation of other currencies”. Trump on Monday announced that the US would levy tariffs on an additional US$200 billion in Chinese imports, with the tariff starting at 10 per cent on September 24 and rising to 25 per cent on January 1 if China does not make trade concessions. In addition, Trump again threatened to “pursue phase three” of tariffs on US$267 billion worth of Chinese goods, affecting almost all the remaining Chinese imports into the US. Beijing immediately retaliated on Tuesday by announcing tariffs of between 5 per cent and 10 per cent on US$60 billion worth of US imports.