China’s national currency will never be used to boost competition or as a means of handling the ongoing trade row, its central bank governor has said. Currency issues have been one of the cornerstones of US-China trade talks.
“China will not use the yuan exchange rate as a tool to boost exports or ease trade frictions,” Yi Gang said on the sidelines of the country’s annual parliamentary meeting, as quoted by Chinese media on Sunday.
The head of China’s central bank was part of Beijing’s negotiating delegation in the talks aimed at ending the conflict between the world’s two largest economies, which has already resulted in tariffs on billions of dollars’ worth of goods. He said that the two sides reached consensus on key fronts, adding that both Beijing and Washington pledged to respect the autonomy of each other’s monetary policy and agreed to refrain from competitive devaluation of their currencies.
US President Donald Trump has been labeling Beijing a currency manipulator, accusing the country of using the yuan as a way to give Chinese exports an advantage over US-made goods. China has repeatedly denied those claims.
Currency issues were on the agenda during the latest round of bilateral negations in February. Back then, the US halted further increases in tariffs, with Trump hailing“substantial progress” in the trade talks, though no details were provided. It is not clear when the two countries’ leaders will meet again to settle the dispute.
Despite the yuan weakening this year, Beijing has tried to maintain it at a “reasonable and balanced” level, according to Yi. He added that the currency’s stability does not mean its exchange rate is fixed.
The Trump administration started the tariff war in a bid to address the trade deficit with China, as well as in response to alleged intellectual property theft. The now-paused trade row has resulted in tariffs on nearly $250 billion of Chinese imports. Beijing retaliated with levies on $110 billion of US goods. However, the punitive measures have failed to eliminate the gap, as the US trade deficit hit its highest level in a decade last year, having increased by $43.6 billion to $419.2 billion.