Formally declaring China a currency manipulator may scratch a long-term itch for...
WASHINGTON - Formally declaring China a currency manipulator may scratch a long-term itch for U.S. President Donald Trump, but the move provides few new tools that have not already been employed in two years of trade negotiations with Beijing.
It is difficult to see how a designation will change the situation other than fanning trade and currency war flames, said Mark Sobel, a former senior U.S. Treasury and IMF official who worked on monetary issues. If no solution can be found, the president can impose various penalties such as banning Overseas Private Investment Corp financing in that country or excluding it from U.S. government procurement contracts.
In May, China was again spared a manipulator designation, even with tighter new criteria specifying that global current account surpluses should not exceed 2% of gross domestic product as trade talks continued.Even during the mid-2000s, when China’s yuan was widely viewed to be significantly undervalued and its current account surplus approached 10% of GDP, the United States refrained from a currency manipulator designation.
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