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US demands China to keep yuan stable

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US demands China to keep yuan stable

It is quite easy to negotiate when you are a leader, and the US regularly and successfully takes advantages of its position. Even considering China’s trade power and aspiration to become the leading economy, it will return to the previous economic stage without the American market. The country’s economic growth directly depends on this trading partner. Besides, the United States can simply restrict technology exports, and this would halt technological progress in China.     

That is why, Washington stands its ground in the trade talks and is not going to make concessions. The US demand to keep the yuan from depreciating is the main clause in the huge list of issues to be negotiated. This is considered one of the key conditions in the Memorandum of Understanding (MOU) for ending the trade war. The MOU is an important document being developed jointly by delegations of the two countries. It is expected to be further signed by US President Donald Trump and Chinese President Xi Jinping.

The state regulator's currency manipulations puts China in a better position compared to other exporters. For example, in 2018, the yuan fell over 5 percent thanks to such conscious policy of the Chinese authorities. The weak exchange rate allows local manufacturers to set lower dollar prices for their goods and thus gain competitive advantages in foreign markets.


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