China says no intention of using currency devaluation to its advantage

BEIJING: China said on Friday it had no intention of using currency devaluation to its advantage in trade, responding to U.S. President Donald Trump´s description of the Asian giant as the "grand champions" of currency manipulation.

Trump said in an interview with Reuters on Thursday he had not "held back" in his assessment that China manipulates its yuan currency, just hours after his new treasury secretary pledged a more methodical approach to analysing Beijing´s foreign exchange practices.

Chinese Foreign Ministry spokesman Geng Shuang said he hoped the United States could "fully and correctly" view the exchange rate issue.

"China has no intention of seeking foreign trade advantages via an intentional devaluation of the renminbi. There is no basis for the continued devaluation of the renminbi," he told a daily media briefing in Beijing.

"If you must attach the label ´grand champion´ to China, then I think China is a grand champion. But we are the grand champions of economic development," Geng added. The Foreign Ministry has no say in currency policy, but it is the only Chinese government department that holds a daily briefing that foreign reporters attend. The central People´s Bank of China did not respond to a request for comment.

In a commentary, the official Xinhua news agency said criticising China for manipulating its currency to prop up trade was a "major myth that has been circulating in Washington for quite a long time".

"Since July 2005, China has decided to unpeg the yuan against the U.S. dollar, and allow it to fluctuate against a basket of currencies so as to better reflect the market changes. Over the years, the renminbi has appreciated substantially against the dollar," it said. Trump has frequently accused China of keeping its currency artificially low against the dollar to make Chinese exports cheaper, "stealing" American manufacturing jobs. But he did not act on a campaign promise to declare China a currency manipulator on his first day in office.

The yuan fell 6.6 percent against the dollar in 2016, its biggest annual drop since 1994, as it was pressured by worries about slowing Chinese growth and more recently by a resurgent dollar, which has spurred capital outflows from many emerging markets.

Chinese authorities have taken numerous steps in recent months to curb capital flight to support the weakening yuan currency, while trying to bring in more foreign investment.

Geng said there was no basis for the continued devaluation of the Chinese currency and he hoped "the relevant side can fully and correctly view the renminbi exchange rate issue".

But China´s foreign exchange regulator said this month the economy still faced weak global demand and financial market volatility caused by expectations of further interest rate rises by the U.S. Federal Reserve.