The US Treasury secretary has warned China not to engage in competitive devaluations of the renminbi as the two countries spar over their economic relations and engage in an escalating trade war. Steven Mnuchin said in an interview with the Financial Times that the Treasury monitored currency issues “very carefully” and noted that the Chinese renminbi had fallen “significantly” during the year, adding that he wanted to discuss the currency with Beijing as part of trade talks. He acknowledged there were several drivers behind the falls in the renminbi, including the country’s own economic issues.
“As we look at trade issues there is no question that we want to make sure China is not doing competitive devaluations,” he said ahead of meetings of the G20, IMF and World Bank in Bali, Indonesia. The onshore renminbi has weakened by 10.9 per cent from its strongest point this year in late March to Rmb6.9213 per dollar. Investors and analysts have raised concerns that the currency is approaching Rmb7 against the greenback — an important psychological mark that would be its weakest level since 2008. The currency has come under pressure this year as a result of the China-US trade war, a slowdown in Chinese economic growth and the broader emerging market sell-off exacerbated by the strengthening dollar.
US officials have warned China that Donald Trump will not engage in trade talks with Xi Jinping at next month’s G20 summit if Beijing does not produce a detailed list of concessions, according to three people briefed on negotiations between the countries. The Chinese, however, say they have such a list but would not present it without some guarantee of it being received in a stable political climate in Washington, including a point person with a mandate to negotiate on behalf of the Trump administration, according to the three people.
US officials have been frustrated by what they see as Beijing’s unwillingness to discuss substantive “structural issues” related to its economic and trade policies. Beijing has been similarly irritated by the erratic approach of the Trump administration, and the inability of US cabinet officials to negotiate binding deals. At the first round of trade talks in early May, US negotiators presented Vice Premier Liu He with a detailed list of more than 140 specific demands, ranging from the elimination of market access barriers to large, long-term purchases of US energy and agricultural commodities that would reduce Beijing’s large goods trade surplus with the US. In August, Chinese negotiators indicated that they could reach agreement on about a third of the demands relatively quickly and were willing to engage in discussions on another third.
The remainder, they added, were off-limits because of national security or other concerns. These included US demands that China’s domestic cloud computing market be opened to foreign companies. But Mr Liu’s team has not yet presented its detailed response to US negotiators. Chinese officials were prepared to do so at a fifth round of trade talks in Washington last month, but the discussions were abruptly cancelled after Mr Trump slapped tariffs on more than half of all Chinese exports to the US. Officials now say that they need China’s response well in advance of the G20 summit in Buenos Aires scheduled for November 30, in order to pave the way for substantive trade discussions between the two leaders.
Mr Xi and Mike Pence, the US vice-president, are also due to attend the annual Asia-Pacific Economic Cooperation leaders’ summit in Papua New Guinea on November 18. China clashes with US over trade tensions Both Mr Liu and his deputy negotiator, Vice Commerce Minister Wang Shouwen, remain reluctant to visit Washington after a dramatic deterioration in bilateral relations. Chinese negotiators have instead suggested that a US cabinet official should visit Beijing in the coming weeks to advance the talks. On Monday, Chinese foreign minister Wang Yi and US secretary of state Mike Pompeo traded barbs, with each blaming the other for undermining the relationship between Washington and Beijing.
The unusually testy public exchange came just days after Mr Pence launched a scathing attack on Beijing, accusing China of trying to sway the outcome of the US midterm elections through propaganda and influence operations. The following day, the Pentagon released a report warning about the consequences of Beijing’s alleged grip on military and industrial supply chains. In another reflection of escalating tensions, Terry Branstad, the US ambassador to Beijing, has been summoned by Chinese foreign ministry officials twice over recent weeks. The first dressing down occurred on September 23 after the US government sanctioned a Chinese military unit and its commander for buying armaments from a Russian company that had been blacklisted by Washington.