While China has been banging the nationalist drums in its government-owned tabloids, warning daily of the adverse consequences to the US from either a trade war, or from Trump’s violating the “One China” policy, a more tangible concern for deteriorating relations between China and the US is that Trump could, and most likely will, brand China a currency manipulator shortly after taking over the the Oval Office. Even Bank of America, which two months ago issued a report arguing that it is too early to base concerns of US trade barriers against China on campaign rhetoric, notes “that recent tweeter feeds from Mr. Trump suggests he disapproves the yuan depreciation, implying a higher probability of naming China as a currency manipulator country after his inauguration in January 2017.”
BofA believes that such an action could take place as soon as the spring of 2017, or around the time the the US Treasury Department meet in April to determine which country on the monitoring list will be named.
First, some background: under rules adopted by the Obama Treasury, China is not a currency manipulator. It fails to meet 2 out of the 3 conditions named below, even though it is on the watch list together with 5 other economies (Japan, Germany, South Korea, Taiwan and Switzerland). The criteria include:
This post was published at Zero Hedge on Jan 9, 2017.
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