Published: Fri, August 09, 2019
Markets | By Otis Pena

China lowers yuan's trading range but currency stabilizes

China lowers yuan's trading range but currency stabilizes

The cost saw an increase of 2.5 billion dollars, or 74 percent, from the same month previous year, said anti-tariff advocacy group Tariffs Hurt the Heartland. Among its trading partners, exports saw major gains in Taiwan (19.9%), ASEAN (15.6%), South Korea (9.2%), and the European Union (6.5%).

In response, China said it would stop purchasing USA agricultural products.

China's trade surplus with the United States stood at US$27.97 billion last month, narrowing from June's US$29.92 billion.

Imports did tumble 5.6% a month ago to $176.5 billion, but they improved from the 7.3% drop in June.

Washington is clearly watching shifts in China's trade patterns as the trade dispute wears on.

A brief ceasefire agreed in late June has proved short-lived, after Trump vowed last week to impose a 10% tariff on $300 billion of Chinese imports from September 1, which would extend levies to effectively all of the goods China sells to the United States. The US recently warned Hanoi that some export goods labeled "Made in Vietnam" were of Chinese origin.

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As a result, China's trade surplus with the USA expanded 11.1 percent to 1.15 trillion yuan.

But the figure for the first seven months of this year was up by around 4 percent, indicating a continuing imbalance.

The statement followed the announcement by US Secretary of the Treasury Steve Mnuchin on Monday that Washington had designated China a "currency manipulator", citing alleged violations by Beijing and the PBOC of "China's G20 commitments to refrain from competitive devaluation".

On Thursday, China's central bank further weakened the yuan by setting a daily anchor for trading in the currency at its weakest level since 2008, breaking through the symbolic 7-per-dollar level that it was allowed to breach earlier this week. "The most powerful policy tool at officials' disposal is the exchange rate, as currency weakness would directly offset much of the impact from the tariffs", said Capital Economics senior China economist Julian Evans-Pritchard in a note last week.

Pressured by weak demand at home and overseas, China's economic growth cooled to a near 30-year low of 6.2% in the second quarter.

Mr. Hu, the Macquarie economist, said as the domestic economy faces more downward pressure later this year, Beijing will have to step up stimulus measures and consider softening its stance on trade issues. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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