US-China trade war: Washington now wants control of the renminbi-yuan

US Treasury Secretary, Steven Mnuchin traveled with President Donald Trump to Missouri to discuss ‘Tax Reform’. (November 28, 2017, US Department of Treasury photo).

The US- China trade war is now taking new dimensions, touching the very financial heart of the most populous country on earth. The Washington administration has already more or less ordered Beijing to perform unbelievable structural changes of American liking in the economy. Now they say monetary issues have to be inserted in the trade negotiations, if and when they start again

Steven Mnuchin, the US Treasury Secretary went even further and said it’s not at all certain, if President Donald Trump is to meet his Chinese counterpart Xi Jinping, despite the fact both of them will be in Buenos Aires next month for the G20 meeting. On top of that, at an interview with CNBC, Mnuchin said “We have been clear with the Chinese that we need to have structural changes, that we need a reciprocal trading relationship and we should be able to increase our exports by hundreds of billions of dollars”. Then, he indicated that currency issues will be included in any trade agreement between the two countries. One careful reader can find here the essence of the aggressive even unsound demands which the American administration is throwing at the Chinese.

Industrial subsidies

On August 27 our leading article was entitled as it follows: “US-China trade war at point of no return: Washington’s demands go beyond tariffs”. The wrapping up in that article was that, “In comparison, the Chinese system is actually more people friendly and democratic than the western arrangement which favors the banks and the bankers instead of producers.” There is more in it though.

This newspaper has already scrutinized and found an empty shell in the American demands for ‘structural changes’ from China. Washington starts from wrong assumptions. It claims China is still a fully centrally planned economy, supports with subsidies its immense industrial sector and just copies western technology.

All those assertions are wrong and refer to the historical past of this immense country. As for certain direct industrial subsidies, there is no country on earth which doesn’t help its productive structures with multifaceted state aid. Washington’s assertions “about misappropriation of U.S. intellectual property and the industrial subsidies Beijing freely employs”, are void of any real meaning.

Ordering exports

The new topics which Mnuchin just raised are the currency issues and the “need for the US to be able to increase its exports to China by hundreds of billions of dollars”. However, every first year student of economics knows that exports of that magnitude cannot be ordered. More so because China has left behind her past of fully centrally planned economy.

Decisions about imports are being taken by hundreds of millions of consumers, who every day choose what kind of goodies to buy. Investors also have a lot to do with imports, but here also quality and price play crucial roles. So, what Mnuchin asks for is, most probably to his knowledge, impossible, but has something else in mind.

Currency manipulation?

Now, the currency issue is not at all new. The Americans have always been watching the movements of the other major currencies very carefully. The US Treasury Department conducts and publishes a relevant report twice a year. In its latest issue, last April, it said “the RMB generally moves against the dollar in a direction that should help reduce China’s trade surplus with the US and had strengthened earlier in the year”. No need to comment on this. Obviously, if there is an option for Beijing to direct the parity of the RMB / Yuan with the dollar, they use it to cut down the Chinese trade surplus with the US.

Not to forget that the US central bank, the Fed, for more than a year has being steadily raising the dollar interest rates and is expected to continue doing so, despite heated objections from the White House. A logical result is then a steady strengthening of the dollar, making the American goods more expensive for foreign buyers. So, the White House administration is totally wrong in reprimanding Beijing about currency issues. As for including monetary aspects in a possible trade deal between US and China, the ball is in the American court. The US has to finally decide if they really want to seriously discuss about one.

Adding new problems every now and then, to an already dangerous confrontation between the two largest economies of the world, betrays no willingness to continue trading. It’s rather an infallible sign of isolationism.

 

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Prepare for a ‘new normal’ as lockdown restrictions ease: Monday’s COVID-19 WHO briefing

Rare Disease Day: a new EU platform to support better diagnosis and treatment

Seaweed, enzymes and compostable cups: Can ‘Big Food’ take on plastic and win?

States with power and influence to end suffering of Yemenis must take action ‘immediately’ – UN rights chief

ECB’s €1.14 trillion again unifies Eurozone; Germany approves sovereign debt risks to be pooled

The Indian case: health policies need to keep pace with public health literacy

EU Youth Conference in Amsterdam: enabling young people to engage in a diverse, connected and inclusive Europe

What washing your hands can teach you about global change

UN Convention that promotes mediation to resolve trade disputes moves closer to entry into force

UNICEF urges all countries to provide ‘Super Dads’ with paid leave

Appreciation of euro to continue

Myanmar: Departing UN rights expert still hopeful for democratic transition

The UN’s unyielding effort to tackle sexual abuse and exploitation: our quarterly update

This man is sleeping out in the Davos cold to make a point about homelessness

MEPs to prioritise environment and climate action in next long-term budget

‘Air bridge’ vaccination operation begins for Ebola-hit communities in DR Congo

ECB’s Draghi favours a cheaper euro to serve all Eurozone countries

UN, Somali Government seek $80 million in immediate relief for flood-affected populations

3 reasons why AI won’t replace human translators… yet

More effort needed to improve equity in education

One in three Venezuelans not getting enough to eat, UN study finds

The Great Reset needs great leaders to help the most vulnerable

The dark side of Diwali, festival of lights

Security Council extends mandate of UN Interim Force in Lebanon for a year

Pride in health care during Pride Month: Are we ready for a dignified health care for LGBTQI+ patients?

Eurozone: There is a remedy for regional convergence

Libya: $202 million needed to bring life-saving aid to half a million people hit by humanitarian crisis

4 reasons why women should lead the G7 agenda in 2018

Electronic cigarette – is it really a safer alternative to smoking?

Female leaders warn about the erosion of women’s rights

Microplastics have been found in Rocky Mountain rainwater

Why the answer to a more sustainable future could lie within the platform economy

This is how India can become the next Silicon Valley

The role of junior entrepreneurs as a bridge between academia and business world

Climate change brings a host of other risks for businesses

Ahead of State of the Union the European Youth Forum highlights lack of action on youth employment

30 years of tissue engineering, what has been achieved?

Using the quarantine to your advantage

The glimmers of hope in the latest dire climate report

EU adopts €55 million support package for Syrian refugees and local communities in Jordan and Lebanon to mitigate coronavirus pandemic

The United Kingdom’s decision to leave the European Union will impact young people’s future the most

Quarantine: A mental health guide for every mood

Bilbao’s city parks offer brain-training games for the elderly

Health Committee MEPs back plans to boost joint assessment of medicines

Recession: the best argument for growth

Study: Trade supports over 36 million jobs across the EU

Italy should boost spending and strengthen cooperation and integration of employment services to help more people into work

‘Highly explosive’ escalation of conflict and displacement across Syria’s Idlib, says top UN official

Companies can help build a more inclusive world. Here’s how

How much more political is the new EU leadership? Does this include personal bend?

Tropical Cyclone Idai affects 1.5 million across Mozambique and Malawi, as UN ramps up response

Constitution of the 9th legislature of the European Parliament

Banking package: Parliament and Council reach an agreement

The European Parliament wants to stay in one place

How technology can help India breathe more easily

European Union supports survivors of sexual violence in conflict

COP21 Business update: Companies urge now for carbon pricing as coal is still a big issue

A multipolar world brings back the national champions

Why is the Strait of Hormuz so important?

The French army is enlisting sci-fi writers to predict the future

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s