The Chinese side expresses deep regret over this act. Such a label is not consistent with the quantitative criteria set by the U.S. Treasury itself for the so-called “Currency Manipulator”. A capricious act of unilateralism and protectionism, it will severely undermine international rules and have material impacts on the global economy and finance.
The RMB exchange rate regime is a managed floating regime based on market supply and demand and with reference to a basket of currencies. There is no such issue as exchange rate manipulation, as by nature, the RMB exchange rate is determined by market supply and demand. Recent RMB depreciation since the beginning of August has been driven and determined by market forces and reflects shifts in market dynamics and volatilities in global foreign exchange markets amid global economic developments and escalating trade frictions. The PBC has been committed to maintaining the RMB exchange rate basically stable at an equilibrium and adaptive level, and our efforts have been widely recognized by international partners.
According to the data of the Bank for International Settlements (BIS), during the period between the beginning of 2005 and June 2019, the RMB Nominal Effective Exchange Rate (NEER) and the Real Effective Exchange Rate (REER) appreciated by 38 percent and 47 percent respectively. The RMB has been the strongest currency among the G20 economies. The size of its appreciation is also among the largest in all currencies. The IMF has pointed out, in the just concluded Article IV consultation, that the RMB was broadly in line with the fundamentals. In the 1997 Asian Financial Crisis and 2008 Global Financial Crisis, China stayed true to its commitment of maintaining RMB stability, and lent strong support to the stability of the financial market and the global economic recovery. Though the U.S. has continued to escalate the trade dispute since early 2018, China has kept its promise of not carrying out competitive devaluation. China has never used and will not use RMB exchange rate as a tool to deal with the trade frictions.
In total disregard of the facts, the U.S. has designated China a currency manipulator. The Chinese side firmly opposes such an act as it harms the interests of both China and U.S.. It will seriously undermine the international financial order and give rise to financial market volatility. Furthermore, it will obstruct international trade, cut into the recovery of the world economy, and ultimately hurt the self-interests of U.S.. This unilateral act has undermined the multilateral consensus on exchange rate and will have negative and serious impacts on the stable functioning of international monetary system. The Chinese side urges the U.S. to rein in its horse at the edge of the cliff, turn back from this wrong path and return to a rational and objective track.
China remains committed to the managed floating exchange rate regime based on market supply and demand and with reference to a basket of currency and keeping the RMB exchange rate basically stable at an equilibrium and adaptive level.
