After several hours of hesitation, the US Treasury finally declared it was “too early” to judge the implications of China’s decision to devalue by about 2% of its currency, which remains today still closely supervised .
At first glance, this advice may surprise. US authorities do not miss an opportunity to accuse Beijing of artificially undervaluing the renminbi, another name for the yuan, to boost the competitiveness of its products abroad.
But the Chinese central bank has taken care to say that the devaluation decided Tuesday was exceptional and above it was accompanied by a greater liberalization of the yuan, responding to a very old requirement of US authorities.
Washington was forced to take note, even cautiously. “China has indicated that the announced changes were a step towards an exchange rate more market-determined,” the Treasury said, while addressing a warning: “Any reverse would be a worrying development”.
– “Contortion” –
Basically, the commitment by Beijing puts the Obama administration in a delicate position at a time when US exports are already sealed by the increase in the dollar and where the deficit with China continues to worsen.
“China’s decision forced the US administration with a difficult contortion” analyzes for AFP Eswar Prasad, a former IMF in charge of China.
He said Washington has thus more “no economic argument” to criticize a decision that could widen its deficit with China and “strengthen” anti-China political diatribes full launch of the race for the House White
2016. “Beijing has given new ammunition (his opponents) at the worst possible time: in the first moments of a presidential campaign,” said Kevin Carmichael and, Centre for International Governance Innovation (CIGI) .
Not stingy with provocations, the Republican primary candidate Donald Trump has rushed into the shafts immediately known Chinese decision. “This will be devastating to our economy,” he thundered on CNN. According to experts interviewed by AFP, the US trade should not, however, suffer from the Chinese devaluation, provided that it is no tomorrow.
“The direct impact on US exports will be limited in the short term,” estimated Robert Kahn, the Council on Foreign Relations.
“But, he adds, if this is the beginning of a more general trend towards devaluation, it would be problematic because that would be an attempt by China to gain an advantage over its main partners commercial “.
The US does not need that. They accussent for many years a very large trade deficit vis-à-vis goods from China (over $ 31 billion in June).
Chinese decision could, however, have less to do with his great American rival with its desire to see the yuan join the exclusive club of major reference currencies on the globe.
Beijing and aims to expand the use of its currency outside its borders by obtaining its inclusion in Special Drawing Rights (SDRs), the unit of account of the International Monetary Fund currently has four currencies (dollar, euro, pound and yen).
“China’s central bank wants to convince the IMF that the renminbi may be a reserve currency, “says Derek Scissors, an economist at the American Enterprise Institute in Washington
The Fund, which will make its decision in November, recently asked its conditions. China’s currency must evolve according to fluctuations market and must be “freely usable”.
With its announcement Tuesday, Beijing seems to have heard the institution and it was, according to Mr. Prasad, “given exactly what she wanted.” Contacted by AFP, the IMF did not react immediately.
Suddenly devaluing its currency, China has however introduced “some uncertainty” little taste of Americans, says Mr. Scissors that s ‘asks: “What will happen if the Chinese decide to further adjustment?”
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