Does Washington fear yuan's evolution?: China Daily contributor

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In the article, the writer says that Washington knows China is globalising the yuan, and has thus accused China of being a currency manipulator.. Read more at straitstimes.com.

BEIJING - By labelling China a"currency manipulator" following Washington's threat to impose 10 percent tariffs on another $300 billion of Chinese goods from Sept 1, the US Treasury Department has dealt another serious blow to bilateral ties.

On Jan 1, 1994, the Chinese government removed the official peg of the yuan and allowed it to float freely, which reflected its market value as determined by a national average based on the different rates of the"swap centres" across the country. The Chinese government used only pragmatic policies to build its foreign exchange reserves and prevent the yuan's devaluation, which widened the scope for currency trade without opening the door to the risks associated with convertibility.

Consequently, the same US institutions that label China a"currency manipulator" insist that the yuan cannot be a global reserve currency unless it becomes fully convertible. For instance, China should first have direct agreements with key countries that are part of the Belt and Road Initiative where China has made huge investments in infrastructure to use the yuan to settle transactions.

This controlled convertibility of the yuan within a band of existing economic alignments and arrangements is consistent with the use of a currency within a controlled space and framework.

 

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