China devalues currency to counter economic slowdown, rankling U.S.

China devalued its currency by almost 2 percent, rankling Washington

(Image credit: Philippe Lopez/AFP/Getty Images)

On Tuesday, China's central bank, the People's Bank of China, moved to devalue the renminbi (yuan) by about 2 percent against the U.S. dollar, its steepest drop since China introduced its modern foreign-exchange system in 1994. A weaker currency should boost China's exports, at a time when Beijing is worried about slow economic growth amid lackluster domestic demand, a deflating real estate market, and sinking stock markets. The devaluation follows a decade in which the renminbi strengthened about 33 percent against the dollar.

Although China's central bank and political leadership acted for domestic reasons, the move will almost certainly cause ripples in Washington, where there was a general consensus that China's currency was already artificially weak (though not what to do about it), and on the campaign trail. "It's going to be a headache," says Conference Board economist Andrew Polk. "Donald Trump is going to have a field day with this."

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Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.