Dismissing US President Donald Trump’s charge of China being a currency manipulator, Premier Li Keqiang Wednesday said Beijing has no intention of devaluing the yuan to boost exports, as it does no good for Chinese companies’ transformation.
Last year, the international foreign exchange market experienced some volatility, and major currencies depreciated against the US dollar, Li said at the annual press conference here, without directly referring to Trump’s charge that China manipulated currency to boost its export revenues.
Last year, yuan depreciated by about 6.6 per cent. Li said the depreciation was quite modest.
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“China has no intention of devaluing its currency to boost exports, as the move does no good for companies’ transformation and upgrading,” Li said, adding that China will continue to push forward reform of its exchange rate formation mechanism, and follow a system of managed floating exchange rate determined by market supply and demand.
His comments came ahead of Chinese President Xi Jinping’s key summit with Trump, who has labelled China a currency manipulator and threatened to slap hefty tariffs on its imports. Their first summit meeting may take place in Florida next month.
“As the floating band of the yuan widens, we have been able to maintain the RMB exchange rate broadly stable at a reasonable and equilibrium level thanks to the sound economic fundamentals. So we believe that China will be able to continue to contribute to the stability of the global currency system,” Li said.
Last year, the US’ deficit in trade in goods with China reached USD 347 million, and Trump promised to close that gap, which he has also attributed to what he calls China’s rigged currency exchange policies. Li said that a trade war of tit-for-tat protectionist measures would ultimately damage the American economy.
China still has the world’s largest foreign exchange reserves (USD 3 trillion), sufficient to pay for imports and repay short-term external debts, Li said. Concerns rose early this year when the level fell for the first time below USD three trillion, a six year low.
“China’s foreign exchange reserves are way above the international standard,” Li said.
The RMB has solid presence in the international currency system and the RMB exchange rate will remain generally stable, he added.