The International Monetary Fund (IMF) said in a report on Friday that the yuan’s exchange rate was “broadly in line with medium-term fundamentals” and China’s central bank “has had little foreign exchange interventions in recent years”, a conclusion that clarifies China’s innocence from currency manipulation.
The IMF said that the country’s external position in 2018 was “broadly in line with the level consistent with medium-term fundamentals and desirable policies”.
The organization also welcomed China’s efforts to reform its exchange rate regime to make the yuan more flexible, according to its report released after its latest Article IV consultation with China that concluded on July 31.
The clarification by the IMF indicates that the US Treasury’s reckless claim on Monday of China engaging in currency manipulation is nothing but unfounded finger-pointing.
As a developing and transitional economy, China has been reforming its currency exchange rate management regime in the past years, gradually liberalizing its currency so that its value can be increasingly determined by market forces.
Its currency stand has been consistent, committed to making the yuan more reflective of market supply and demand changes. During that process, it is normal for the yuan to experience two-way fluctuations.
China has vowed repeatedly that it will not use competitive devaluation to facilitate trade and as the IMF report shows, it has kept its promise.
In fact, the yuan had appreciated 38 percent in nominal terms and by 47 percent in real effective terms from early 2005 to this June, making it the strongest currency among those of the G20 members.
China’s efforts to liberalize the yuan cannot have been ignored by the US government. But out of the hideous motive to dampen China’s development on all fronts, the US government has used its Exchange Rate and International Economic Policy Coordination Act of 1988, which is deemed subjective and without quantitative standards, to nonetheless define China as a currency manipulator to pave the way for future anti-China moves.
That it has opted to shun its Trade Facilitation and Trade Enforcement Act of 2015, which at least has objective quantitative standards, just betrays its thuggish deliberation in singling out China as a “currency manipulator”.
A variety of economists and experts, including those from within the United States, have criticized the US government of failing to respect facts and evidences when it takes the yuan’s fluctuation in a very short period of time to define China as a currency manipulator regardless of its latest criteria for currency manipulation set in its 2015 act.
Such an arbitrary and politicized move will set a harmful precedent that is set to have a profound impact on the international economic and trade order. It disrupts the normal order of international competition and means that the powerful country can take any excuse to irresponsibly crack down on its rivals.
The international community should join hands and stand up to stop such farce and safeguard international economic order. CHINA DAILY