Guwahati  
 
logo
  Guwahati,
North East »» Trinamool Congress' Tripura leader says not joining BJP•••Chakmas urge Mizoram CM to stop discrimination•••State »» Digboi MLA alleges misappropriation of fund meant for road repair•••'BJP government trying to hand over agricultural land to corporates'•••Union Minister Jayant Sinha to deliver memorial lecture •••National »» Made mistakes, will introspect & correct: Kejriwal•••Congress alleges Dhingra report leaked, Khattar denies•••Former soldier pens gripping tale of cross-border love•••International »» Hekmatyar calls on Taliban to lay down arms•••Beijing sees April?s hottest day in 66 years•••Islam does not condone terrorism: Al-Azhar chief•••    
  Home » Editorial » Story
 
Will Donald Trump take on the Chinese yuan?

By Vatsal Srivastava

China has long been labelled a currency manipulator, having an unfair advantage in the global export arena. However, these allegations have never stopped Beijing from intervening in the currency markets at will, without taking into consideration the negative spillover effects on FX volatility and global trade.

But now it seems that US President Donald Trump is all set to unleash a new tactical strategy on China and its currency policy. There has been no official announcement on this matter out of the White House as yet, but it is extremely likely that the author of “The Art of the Deal” will start deploying his hardball approach on China soon.

The US Trade Facilitation and Trade Enforcement Act of 2015 uses three “assessment factors” for labelling a country as a currency manipulator. They are:

* It has a material bilateral trade surplus with the US, which the Treasury has currently set at a nominal value of $20 billion.

* It has a material current account (CA) surplus, which the Treasury sets at a benchmark cutoff of three per cent of the GDP.

* It engages in persistent one-sided intervention in the foreign exchange market, which the US describes as being more than two per cent of its GDP over the year.

China meets the first two conditions but due to the unreliable nature of foreign exchange data out of the country, it is hard to determine whether the third condition holds or not.  India, of course, by the virtue of its current account deficit is not on this list. It is important to note that labelling China (or any other country for that matter) as a currency manipulator doesn’t carry much teeth under law unless it can be reinterpreted as an unfair subsidy. Thus, it would be fair to assume that the US Commerce Secretary would now designate currency manipulation as an unfair subsidy.

This would potentially open doors for US imposing countervailing duties/tariffs which would then be outside of the World Trade Organisation (WTO) framework. While WTO has rules against subsidies, the rules do not encompass currency manipulation. Such a move would be a big departure from the norm and would give US additional arsenal for trade negotiation; it may also lead to an escalation of WTO dispute filings and retaliation if US follows through on this threat.

More importantly, this could influence trade and FX policy in some countries as a pre-emptive move to counteract this US policy shift. The article also says that US would no longer single out China but that its measures related to currency would apply to “other countries” as well. Japan, South Korea, Thailand and Vietnam are all at risk amongst the Asian economies.

It would be interesting to see the price action in the global currency markets and China’s response to these potential actions. One can only hope that The Donald does not ignite a global currency war. (IANS)

.
       
Maximum
 
Minimum
 
oC
oC
oC
oC
oC
oC
oC
oC
oC
oC
oC
oC
 Arunachal News
BJP stages protest rally against China claim
Khandu discloses 'Vision for Arunachal's development'
Cyclone hits Papum Pare, five injured
Pasighat-Pangin road opens for traffic
 Meghalaya News
'Where will an aggrieved person go if CEM violates rules?'
BSNL to expand in M'laya with a viable market
Black ballpoint pens to be mandatory for Assam examinees
Cardiac training at GVK EMRI Shillong
 Northeast News
Trinamool Congress' Tripura leader says not joining BJP
Chakmas urge Mizoram CM to stop discrimination
 Cachar News
Highway sans drains hits Tarapur residents
AAMSU concerned at 'harassment' on minorities, seeks CM's intervention
Workshop on calligraphy from May 12
 National News
Made mistakes, will introspect & correct: Kejriwal
Congress alleges Dhingra report leaked, Khattar denies
Former soldier pens gripping tale of cross-border love
BSF hands over minor intruder from Pakistan
 International News
Hekmatyar calls on Taliban to lay down arms
Beijing sees April?s hottest day in 66 years
Islam does not condone terrorism: Al-Azhar chief
SpaceX set to launch US spy satellite today
 State-1
Digboi MLA alleges misappropriation of fund meant for road repair
'BJP government trying to hand over agricultural land to corporates'
Union Minister Jayant Sinha to deliver memorial lecture
NACS demands liquor shop to be closed down
 State-2
Concern over flourishing liquor business in Margherita
Nagaon Police nabs six smugglers, rhino horn seized
Harisinga HS School bids farewell to retired teacher
Harisinga HS School bids farewell to retired teacher
 Local Sports
Dibrugarh win
 Sports
I-League: Aizawl eye history as Bagan hope for miracle
India, Britain draw in Azlan Shah tie
Ponting feels Dhoni still has plenty to offer to Indian cricket
Judo training centres to be opened in Guwahati, Aizawl
 Editorial
Contravening liquor ban
If India backs renewables, no need for coal
Will talks help improve Kashmir situation?
Letters to the Editor
 Op-Ed (Sunday)
Kejriwal a dangerous idea!
K Vishwanath: A legend of Indian Cinema
Past Never Returns
 
Assam
 
Assam is a northeastern state of India with its capital at Dispur located in the city of Guwahati.
 
more...
Nagaland
 
Nagaland is a northeastern state of India with its capital at Kohima. located in the Guwahati city.
 
more...
Mizoram
 
Mizoram is a northeastern state of India with its capital at Aizwal. located in the Guwahati city.
 
more...
Meghalaya
 
Meghalaya is a northeastern state of India with its capital at Shillong. located in the Guwahati.
 
more...
Manipur
 
Manipur is a northeastern state of India with its capital at Imphal.
 
more...
Tripura
 
Tripura is a northeastern state of India with its capital at Agartala.
 
more...
Arunachal Pradesh
 
Arunachal Pradesh is a northeastern state of India with its capital at Itanagar.
 
more...
Sikkim
 
Sikkim is a northeastern state of India with its capital at Gangtok.
 
more...
Home  |  Guwahati City  |  Editorial  |  International  |  National  |  Business  |  Arunachal  |  Meghalaya   |  Northeast  |  State  |  Cachar  |  Sports   |  Local Sports
 Archive  |  Melange  |  Saturday Fare  |  Junior Sentinel  |  Multilingual  |  About Us  |  Contact Us  |  Advertise with us  |  Dongmusa