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The trade war between China and the United States is intensifying, but Beijing has just removed a potential weapon from the table.
Prime Minister Li Keqiang told an audience of world leaders and politicians that China would not weaken the yuan to boost trade with the rest of the world.
"China will never engage in stimulating exports by devaluing its currency," Chinese Premier Li Keqiang said on Wednesday.
His comments came a day after the United States and China announced that they would impose their biggest tariff rounds still on each other's exports, starting next week.
This brings the value of goods affected by tariffs into the growing conflict to more than 360 billion dollars. President Donald Trump has threatened to receive an additional $ 267 billion worth of Chinese products with tariffs.
China, which buys much less from the United States than the other way around, is starting to no longer target US products, which is leading to speculation as to what further action needs to be taken to respond.
Li said the decline in the currency, also known as the renminbi, is not one of those causes.
"The persistent depreciation of the renminbi will only do more harm than good to our country," he said during a speech at an event of the World Economic Forum in Tianjin, in the north of China.
The yuan has fallen sharply against the dollar as the trade struggle has intensified, losing about 9% of its value since April.
Accused of manipulation
The decline has drawn the attention of President Trump, who has often accused China of devaluing the yuan to boost its huge export industry. Asset claims In July, China "manipulated" its currency down.
Li rejected this idea Wednesday.
"Recent fluctuations in the renminbi's exchange rate have been seen by some as an intentional measure on the part of China," he said. "It's just not true."
The Chinese government plays an important role in determining the value of the yuan and its transactions. Economists generally agree that Beijing has kept artificially low money in the past, but they doubt that the government's intervention has pulled it down against the dollar and other major currencies this year.
They say the escalation of the trade war with the United States and worries about the slowdown in the Chinese economy have helped bring down the yuan at a time when the US Federal Reserve is steadily increasing its rates. # 39; s interest. This policy makes it more attractive for investors to hold assets in US dollars, encouraging them to sell other currencies.
The sudden declines in the yuan in 2015 and early 2016 led to turmoil in world markets as China shed money. Beijing has spent hundreds of billions of dollars to support it.
China "will work to create the conditions to maintain the value of the yuan stable," Li said Wednesday.
His words were not enough to convince everyone, though.
"Manipulation has occurred and is occurring, and I hope steps will be taken," said Todd Rokita, an Indonesian congressman who supports Trump at the Tianjin Conference, minutes after the speech. from Li.
CNNMoney (Tianjin, China) First published on September 19, 2018: 3:26 AM ET
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