The trade dispute was only the beginning: now threatens the currency war

The Chinese currency has been losing value for months. Trump badumes that Beijing will devalue exports through devaluation and therefore wants to absorb punitive US tariffs. But it is not so easy.

With escalating trade conflict between the United States and China, the fear of a currency war is reversed. The Chinese yuan has lost more than seven percent against the US dollar since April, so American President Donald Trump is already feeling the manipulation: "In China, the currency is falling like a stone and our currency is going up and down. I must tell them According to Trump, in a recent interview,

the accusation is that China was deliberately devaluing its currency to reduce exports to world markets, thereby absorbing the impact of US tariffs.

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The IMF contradicts Trump

The devaluation as a weapon of trade conflict may seem logical, but has nothing to do with the reality here. " Not only the International Monetary Fund (IMF) has just certified that the exchange rate of the Line "with the fundamentals of its economy.

Many experts also see the market forces at work. monn The Chinese central bank is not freely convertible and can only fluctuate by two percent a day, and is therefore moving towards determining the daily exchange rate on the market. "The government does not intervene this time" Commentator of Chinese Affairs Ye Tan. "It's market development." The yuan is based on a basket of more than 20 currencies, which are often closely linked to the US dollar: if the US dollar rises, the yuan falls.

"Exchanging a lot of problems for another"

The US currency has now gained 6% against the euro in six months – and up to 8% against a series of currencies, experts say Yuan should actually continue to fall, but the central bank is preventing it.

"It is unlikely that China will want a strong and lasting devaluation of Yuan," said US economics professor Christopher Balding in an badysis for Bloomberg's financial department, "That would lead to a lot of problems being swapped against another, "says the Chinese economist, who teaches at HSBC Business School in the Chinese metropolis of Shenzhen

" Consumers and businesses should accept a double-blow – prices rise thanks to tariffs and less of buying power through a weaker currency. "If the yuan was cheaper, Chinese citizens would have to pay more for imported foreign goods.

The weak growth of the second economy and the escalation of the trade dispute depress from the point of view of economics professor Hu Xingdou also on the yuan exchange rate. "On the one hand, the Chinese economy is going badly," says Hu Xingdou, "on the other hand, the effects of the trade war darken the trust." The independent economist is convinced that Beijing does not intervene artificially. "Nothing indicates that the government controls the course."

The horror of 2015, when the rapid fall of the yuan on the stock market has resulted in mbadive outflows of capital and a shockwave, is still in everyone's mind today. no reason for the sudden weakness of the yuan, which triggered uncertainty in global markets. "There were manipulations in 2015," says Hu Xingdou, "but this time it's more in tune with the market." to sink the cellar. Unlike 2015, when the central bank did not make its actions transparent, the Chinese monetary authorities now formulate their intentions clearly: "In principle, the exchange rate must be kept at a reasonable level. "Said Central Bank Governor Yi Gang, who calmed the markets. Wang Chunying, spokesman for the foreign exchange authority, said: "China is capable and confident of meeting all kinds of challenges."

The Chinese newspaper Global Times openly accuses the United States of "stupidity" and Trump in the trade dispute being "the greatest uncertainty factor in the world today." The newspaper, published by the organ of the party "Volkszeitung", warns: "Pbading from a trade war to a financial war would undoubtedly add chaos to the global economy."

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