China rules out currency devaluation to boost global trade

China has categorically ruled out devaluing its currency in a bid to boost exports, despite the growing threat of an all-out trade war with the US.

Speaking to an audience of global executives and policymakers, Premier Li Keqiang said that Beijing would not weaken the yuan to boost trade with the rest of the world, while at the same time urging the World Economic Forum to defend the basic principles of “multilateralism and free trade”.

His comments appear to address claims that China is using its currency as a tool in the trade war with the US and come after the Trump administration announced it would impose new tariffs on $200bn worth of Chinese goods.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

The yuan, also known as the renminbi, has dropped sharply against the dollar as the trade fight has ramped up, losing about 9% of its value since April.

This has led US President Donald Trump to repeat accusations first made on his campaign trail that China is manipulating its currency to combat US tariffs, “raising concerns that the currency market could become the next front in the economic battle between the two countries”, says the BBC.

This was strongly denied by Li. But with the trade war between China and the United States intensifying, “Beijing has just taken one potential weapon off the table”, reports CNN Money.

The news channel says China, which buys far less from the United States than the other way round, is starting to run low on American products to target, “raising speculation about what other measures it could take to hit back”.