Evidence Disproves Trump’s Claims of China’s ‘Cheap Yuan’
- THE CHINA NOW
- Mar 5
- 3 min read
Summary
President Trump claimed that China has been deliberately weakening its currency, the yuan, to manipulate trade.
Evidence suggests that the yuan has remained relatively stable, with no clear evidence supporting Trump's accusations of manipulation.
Despite some depreciation, the People's Bank of China has taken measures to stabilize the yuan.
U.S. President Donald Trump has repeatedly accused China of deliberately manipulating its currency, the yuan, to gain an unfair advantage in trade. The president claims that the Chinese government has artificially lowered the value of the yuan to make Chinese exports cheaper, thereby increasing their competitiveness on the global market. Trump’s accusations came during trade talks with China, intensifying already strained economic relations between the two nations.
The Yuan's Performance: Stable Despite Claims
Contrary to Trump’s claims, evidence from the foreign exchange markets suggests that the yuan has remained relatively stable. According to data from the China Foreign Exchange Trade System (CFETS), which tracks the yuan’s performance against a basket of global currencies, the yuan has only depreciated by 1.4% this year. While there has been some depreciation against the U.S. dollar, this aligns with broader trends in global currency markets rather than any deliberate action by China.
According to data from the China Foreign Exchange Trade System (CFETS), the yuan has only depreciated by 1.4% this year.
Since Trump’s inauguration, the yuan has fallen approximately 2.5% against the U.S. dollar, but this decline is attributed to the rising strength of the U.S. dollar, rather than direct manipulation by the Chinese government.
China’s Efforts to Stabilize the Yuan
In response to market fluctuations, the People’s Bank of China (PBOC) has introduced several measures to stabilize the yuan. The PBOC has adjusted its daily midpoint for the yuan and has used its foreign exchange reserves to buffer against any significant depreciation. Additionally, China has been proactive in managing its currency, with state-owned banks selling U.S. dollars to prevent the yuan from falling too sharply.
These actions indicate that China is focused on maintaining currency stability, rather than intentionally devaluing its currency to gain trade advantages, as suggested by Trump.
In response to market fluctuations, the People’s Bank of China (PBOC) has introduced several measures to stabilize the yuan.
Global Economic Context and the Role of the Yuan
Experts suggest that the current level of depreciation is more reflective of China’s economic slowdown and low yields, rather than any intentional devaluation strategy. The fall in foreign investment and weaker domestic consumption have also contributed to the yuan’s slight decline. However, despite these challenges, China remains focused on maintaining the stability of its currency to avoid triggering capital flight and economic instability.
Analysis of Trump’s Trade Position
Some analysts speculate that Trump’s continued focus on the yuan could be part of his broader strategy to negotiate more favorable trade terms with China. The notion of a “cheap yuan” fits within Trump’s larger argument that China’s trade practices are not fair. However, experts believe that these claims are based more on political positioning rather than on economic facts.
The Path Forward for U.S.-China Relations
While Trump’s accusations against China regarding currency manipulation continue to make headlines, the reality is that China’s focus is on maintaining currency stability rather than manipulating the yuan. As the trade war between China and the U.S. persists, the question of currency manipulation will likely remain a key issue in future negotiations.
Experts suggest that the current level of depreciation is more reflective of China’s economic slowdown and low yields, rather than any intentional devaluation strategy.
The ongoing dialogue about trade imbalances, tariffs, and currency values will continue to shape the broader economic relationship between the two countries, but it remains clear that China is working towards long-term economic stability, not currency devaluation for trade advantage.