Media Review: IMF Report Punctures the Exchange Rate Planting Trick

 Media Review: IMF Report Punctures the Exchange Rate Planting Trick

The International Monetary Fund (IMF) issued its annual Article 4 consultation report on August 9, reiterating that Chinas current account surplus declined in 2018 and that the level of RMB exchange rate was basically in line with economic fundamentals. Several American experts said that the IMF report clearly showed that there was no manipulation of the exchange rate in China. The U.S. Treasury Department listed China as a manipulator of the exchange rate based on President Trumps tweet rather than objective analysis. It was an arbitrary, capricious and politicized decision. (See Relevant Report 06)

On August 5, the exchange rate of RMB against the US dollar broke through the 7 integer barrier, which aroused widespread concern. Earlier, the U.S. government suddenly changed its mind and announced that it was going to impose tariffs on China. Therefore, the breaking 7 of the RMB exchange rate is the normal response of the market to this negative impact. In recent years, the market-oriented reform of exchange rate has continued to deepen, the RMB exchange rate has maintained a reasonable equilibrium level, while the exchange rate elasticity has been increasing, and the fluctuation range has also increased. This time, the RMB exchange rate breaks 7, which shows the high degree of marketization of the RMB exchange rate, and also shows that powerful market forces can not be manipulated by anyone at will.

The U.S. Treasury has roughly classified China as a currency manipulator, mainly on the pretext that the exchange rate of the RMB against the U.S. dollar has fallen rapidly in recent days. This barbaric act of reversing black and white by the US side has seriously damaged international rules and caused considerable impact on the global market, which has been questioned and opposed by all parties. Some American scholars have pointed out that the recent devaluation of the RMB against the US dollar is not man-made, but the natural reaction of the market to the threat of the US government imposing tariffs. This action of the US Treasury Department damages the credibility of the US government and may bring recession risks to the US economy.

The consultation report issued by the International Monetary Fund reiterates that the RMB exchange rate conforms to Chinas economic fundamentals and confirms that China has not manipulated the exchange rate. The authoritative conclusion of this global international financial institution confirms once again that the US is abusing its position in the international financial and trade system. The relevant trade and financial measures taken by the US against China are totally irresponsible politicized decisions.

To classify China as a currency manipulator is a serious violation of basic common sense and professionalism, in the final analysis, in order to prevent Chinas development. Some people in the United States have labeled China wantonly regardless of the facts, not today, but always. Before that, they also labeled China with negative labels such as intellectual property theft, non-compliance with WTO rules, rule breakers. For a long time, some people in the United States and other countries have been splashing dirty water, stumbling and labeling in an attempt to discredit Chinas international image and curb Chinas development. However, all kinds of farces have ended in failure.

The U.S. Treasury Department classifies China as a currency manipulator. The allegation of currency manipulation is simply untenable. Such absurd logic and ridiculous practices are disdained by more and more people of insight in the international community. As a responsible big country, China adheres to market-determined exchange rate regime, does not engage in competitive devaluation and does not use exchange rate for competitive purposes. China is unswerving in fulfilling its commitments. During the Asian financial crisis and the international financial crisis, China has always maintained the stability of the RMB exchange rate, which has strongly supported international financial stability and global economic recovery.

At present, China will not use exchange rate as a tool in dealing with external interference such as trade frictions. China has sufficient foreign exchange reserves and a balanced balance of payments, which can fully support the basic stability of the RMB exchange rate. Looking forward to the future, Chinas economic development has great potential and obvious advantages. At the same time, China adheres to the position of multilateralism and free trade, conforms to the trend of the times, and has a promising future of sustainable and healthy development. History has proved and will continue to prove that Chinas peaceful development can not be blocked by anyone. Those self-priority who endanger the international economic and trade order and the stability of the world economy will eventually bear its own fruit.

Fan Dabiao, a commentator of this newspaper

Source: Wang Xiaowu_NF, Responsible Editor of Beijing Youth Daily