China’s Premier hits back at Donald Trump’s attacks on currency manipulation, vowing to keep the yuan ‘basically stable’

Paul Colgan, Business InsiderChinese Premier Li Keqiang addresses the World Economic Forum in Tianjin.
  • Chinese Premier Li Keqiang has used an address to a World Economic Forum event to hit back at Donald Trump’s continued claims that Beijing has been manipulating its currency.
  • The Chinese currency has been weakening, helping to keep the nation’s products competitive in the face of the Trump administration’s import tariffs.
  • Li said this was due to market forces but also suggested Beijing would prevent ongoing depreciation, saying it would “do more harm than good”.
  • The Premier also said he would double or triple penalties for intellectual property theft, making them “unaffordable” for violators.

TIANJIN, China — China’s Premier has struck back at claims by US President Donald Trump that Beijing has been engaged in currency manipulation to bolster its competitiveness amid the escalating global trade war.

Li Keqiang – China’s second most powerful official – used a keynote speech at a World Economic Forum event in the industrial city of Tianjin to vow not to pursue a policy of currency devaluation to counteract tariff measures imposed by the Trump administration.

In a speech extolling the virtues of multilateralism and free trade at a World Economic Forum gathering, Li noted that “recent fluctuations” in the Chinese currency “have been seen by some as an intentional measure” on the part of Beijing to reduce prices of China’s exports to foreign buyers.

It was a clear reference to comments from Trump, who in the past has threatened to put China on an official list of currency manipulators and just last month repeated his belief that China has been artificially weakening its currency.

Li directly denied this was the case, saying the decline was due to market forces and adding the government would not allow a continued devaluation.

“Persistent depreciation of [China’s currency] the RMB will only do more harm than good to our economy,” Li said, according to a real-time translation provided at the event. He followed up by repeating that a weaker currency “will only come at a cost of damaging China’s economic environment”.

China would “stick to market-oriented foreign exchange reform”, Le said, adding that the currency would be kept “basically stable at an adaptive level”.

Like those of most emerging market nations, China’s currency has been weakening this year as the US dollar has steadily strengthened – largely due to the Federal Reserve steadily lifting its official interest rate — but also partly because of some of the Trump administration’s policies, including its corporate tax cuts which has encouraged repatriation of capital held abroad by US-based multinationals.

The yuan has fallen 9% against the dollar this year, partly neutralising the price impact of the US government’s 25% tariffs on $US50 billion worth of exports. However, the next round of tariffs proposed by the Trump administration involves a 25% import tax on more than 5,000 items.

While he did not speak about tariffs, Li also used his speech to address other key complaints of the Trump administration – intellectual property theft and the unequal treatment of foreign companies in China – and reaffirm Beijing’s commitment to continue to open up its economy.

“No unilateralism will offer a viable solution” to global economic challenges, Li said.

He said penalties for intellectual property theft would be “dealt with seriously…with doubled or even tripled unaffordable penalties” for breaches in order to ensure firms are “comfortable” bringing their business to China.

“Every IP right needs to be fully protected,” Li said, adding that “all violations will be dealt with to the full extent of the law”.

He told the audience of entrepreneurs, investors and executives that if they found they were being treated unfairly, they should file a complaint with the central government. He warned that officials “will be punished” if they are found to be treating companies unequally.

Li said the central government would continue to reduce taxes and fees for businesses. “This is not empty talk…[the government] will make sure these are materialised with concrete actions.”

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