Trump Should Think Twice Before Flying Off the Handle About China

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.


Donald Trump—or someone speaking for him, anyway—says that he plans to label China a currency manipulator on “day one” of his presidency. Fair enough. China does intervene in currency markets to manipulate the value of the yuan. Unfortunately, Trump might not like what would happen if China decides to call his bluff:

The simple act of calling out China for manipulating the value of its currency to gain an export advantage shouldn’t roil Beijing to the point of retaliation, said Derek Scissors, a China economy expert at the American Enterprise Institute….But slapping retaliatory tariffs on Chinese goods would be more difficult because it would require congressional approval — a problem given that Republican leaders have been opposed to legislation to punish Chinese currency devaluation with duties, Scissors said.

There’s also the question of whether China is actually devaluing its currency. Most economists agree Beijing intervenes heavily in its currency markets, but in recent years has actually been propping up the value of the renminbi rather than lowering it.

Hmmm. Here is Brad Setser:

The monthly data suggest China has not bought foreign exchange in the market to keep the yuan from appreciating in the past 6 quarters or so, only sold. Its intervention in the market has worked to prevent exchange rate moves that would have the effect of widening China’s current account surplus over time. Every indicator of intervention that I track is telling the same story.

….If China stopped all management (“e.g. manipulation”) and let the yuan float against the dollar, China’s currency would drop. Possibly precipitously. China’s export machine would get a new boost. And rising exports would take pressure off China’s governments to make the difficult reforms needed to create a stronger domestic consumer base.

In other words, right now China’s currency is overvalued. If they weren’t manipulating it, it would most likely have fallen even more than it has—something along the lines of the chart on the right. This would mean Chinese imports get even cheaper, American exports get more expensive, and the trade deficit increases. This is exactly the opposite of what Trump wants.

Demonizing foreigners as the cause of all our problems is apparently a good campaign tactic. Dealing with the real world is a little different. Hopefully Trump will talk to a few actual economists and trade experts before he makes good on this particular promise.

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate