Renewed allegations of “currency manipulation” in the US-China bilateral agenda have less to do with the Chinese renminbi than US election politics and the Fed’s anticipated rate hikes.
Even before the start of the eighth and final Strategic and Economic Dialogue (S&ED) of the Obama administration, the issue of the exchange rate is back on the agenda.
After the decline of China’s yuan shook global markets in January, the People’s Bank of China (PBoC) calmed investors by stating that the government had no intention to devalue the yuan. However, as the US Treasury sees it, China’s yuan has decreased to five-year lows against the dollar in recent weeks.
The real story is more complicated.
About the Author
Dan Steinbock is the founder of Difference Group and has served as research director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Centre (Singapore)