China’s central bank sets new midpoint for the yuan
China’s Central Bank has ceased to restrain the weakening of the Yuanatorgovaya War moved to cash with tightening of trade disputes of the PRC-USA led to the fall of exchange quotes (s index&P 500 on Monday fell by more than 2%), oil from Thursday fell by almost 6%. US President Donald Trump reacted to change the course of the yuan, calling it “currency manipulation” and indicating that it will bring to the weakening of the Chinese economy. Note that in May of this year, the US Department of Finance did not appropriate the status of a currency manipulator, limiting the statement of intention to monitor the situation.
Recall, on August 1, Donald Trump unexpectedly announced its intention to introduce decisions from September 1, the volume of Chinese imports in the amount of about $ 325 billion, despite the agreement on the traffic police, achieved at a bilateral meeting with the Chairman of the PRC X Jinpin at the end of June at the summit ” Twenty “in Osaka. Then in Washington promised to continue the negotiations and not to introduce new duties, but the next round of negotiations last week was unsuccessful last week. Unlike previously introduced duties, which concerned primarily industrial goods and components, now raising tariffs should be affected by various consumer goods.
Now the total supply of two countries to which increased tariffs are applied is $ 360 billion, of which $ 110 billion comes to US exports to China.
In Beijing, they have already promised to introduce retaliatory measures if the duties are raised yet, and also abandoned promises to increase the procurement of agrofroducts.
It is expected that restrictions can affect the work of American companies in the country, including the passage of regulatory procedures and licenses. Also in Beijing declared their intention to prepare a list of “unreliable partners” in the American business environment. So far, despite the action of duties, China’s surplus in trade with the United States continues to grow – in the first half of this year it has increased to $ 140.48 billion against $ 133.76 billion last year. So, in June, imports of American goods to China fell by 31.4%, while exports to the United States are only 7.8%.
Yuri Bsyukov about the trading war of the United States and China
“Given that China’s Central Bank has recently tightened control over the outflow of capital, this risk of weaking yuan has become less significant. Probably, the regulator constrained the decline of the course to a greater extent due to the continuation of trade negotiations, so that the current weakening can be a sign that the Chinese side is no longer counting on the achievement of the transaction, “Capital Economics experts believe. Ing bank also indicate that weakening above 7 yuan for $ 1 would have previously led to a negotiation stop.
“China has not so many ways to answer American duties so as not to harm themselves, therefore the authorities will focus on stimulating measures of measures and will allow further weakening of the yuan,” predicts Capital Economics.
At the same time, only goods worth $ 50 billion remained from the total import of imports from the United States in 2018 in the amount of $ 160 billion uncovered Chinese duties. In them, Chinese companies will be difficult to find alternative suppliers, especially for aircraft and high-tech products, indicate the experts of the Center.