The next day of Washington marked Beijing a currency manipulator in a rapidly escalating trade dispute, China’s official Communist Party newspaper said on Tuesday the United States was “deliberately destroying international order”.
In an editorial, the People’s Daily also said the United States was holding its own citizens to ransom, without mentioning the latest U.S. move.
The editorial said it is the responsibility of big countries to provide world stability and certainty while forming conditions and possibilities for the common development of all countries. “But some people in the United States do just the opposite,” it added.
On Monday, the U.S Treasury Department said it has determined for the first time since 1994 that China was manipulating its currency, taking their trade war into uncharted territory and adding to frenzied selling in global financial markets.
The declaration comes after China let its yuan currency break through the main support level to an 11-year low, in a sign Beijing might be eager to tolerate more currency weakness as Washington threatens to impose more tariffs.
After falling sharply against the dollar the previous day, the yuan extended losses in onshore and offshore markets on Tuesday. “In a strict sense, it’s baseless for the U.S. side to determine that there was exchange rate manipulation based on the change in the exchange rate of the RMB (yuan) on a single day,” said Zhang Anyuan, Chief Economist at China Securities.
“Now that there is a label of exchange rate manipulation, (we) do not rule out the U.S. will introduce punishing measures that go beyond existing understanding of the situation.”
On Tuesday, in an editorial, the China Daily said that the yuan was weak as a result of “unilateral and protectionist moves by the U.S. government” and said long-term exchange rates were decided by “economic fundamentals”.
According to analysts, the U.S move could rapidly increase the trade war, which had already been spreading beyond tariffs to other areas, such as technology. Previously, Trump had announced China’s move over currency to be “a major violation”.
Mark Sobel, a former senior Treasury, and IMF official said, “It’s ridiculous that they’ve declared China a currency manipulator.”
“They don’t have any meaningful tools to do anything about it unless they just want to pile more tariffs on,” Mark added.