Is China Currency Manipulator? Trump’s Trade Advisor Navarro Not Know!


Reuters says in its report “Trump adviser Navarro: U.S, Germany should discuss trade outside EU” that Trump administration trade adviser Peter Navarro wants to deal with US trade deficit with Germany amounting to $65 billion but believes that it is very difficult to tackle the issue. The US regards Germany as currency manipulator, but Germany argues that the exchange rate of Euro is not determined by Germany.

What about China?

The report points out that Trump said during his election campaign that he would declare China a currency manipulator on his first day in office but did not do so though he still claimed that China was champion of currency manipulator in his interview with Reuters.

What shall the US do in dealing with China? Now, even his trade advisor Navarro is not sure. He could only say that according to classic trade theory the yuan’s value should rise and the dollar shall fall, but unfortunate for him US exchange rate is determined by market instead of theory while China is manipulating yuan’s rate to prevent it from falling as being determined by the market.

Navarro knows that. He wants yuan to rise, but it will fall if China does not manipulate the rate. What shall he do? Navarro would wait for the Treasury report for a final verdict.

China’s final goal is to let yuan’s rate be determined by the market so as to remove US dollar’ financial monopoly. If trump forces China to do so, he will play into China’s hands. Will Navarro help Trump do so?

Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at http://www.reuters.com/article/us-usa-trump-trade-navarro-idUSKBN16D1KK.

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