China and Trump look set for simultaneous trade and currency wars

Chinese
President Xi Jinping; US President Donald
Trump.
REUTERS/Fred Dufour/Pool; Alex
Wong/Getty Images

• China hit out at Trump, accusing the US president
  of “bullying” over his aggressive tactics in the trade conflict
  between the two nations.
• It warned, however, that it is ready to “rise up” to an
  escalated trade war.
• “This unyielding nation suffered foreign bullying for
  many times in history, but never succumbed to it even in the
  most difficult conditions,” commerce minister Zhong Shan
  said.
• Separately, US Treasury secretary Steven Mnuchin said
  that his department continues to monitor China’s actions with
  regards to its currency, the renminbi.

China’s government has hit back at the Trump
administration, accusing the US president of “bullying” over his
aggressive tactics in the escalating trade conflict between the
two nations, saying it will “rise up” should a full-scale trade
war break out.

“China doesn’t want a trade war, but would rise up to it
should it break out,” Zhong Shan, China’s minister for commerce
said in a statement.

So far, the Trump administration has
placed tariffs
on $250 billion worth of Chinese goods,
affecting more
than 5,000 products. The president, however, has
said he
is willing to “go to 500”— a colloquial term for placing
tariffs on all US imports from China.

What was initially seen as an empty threat is now
viewed by many observers as a genuine possibility after the
latest round of tariffs were announced in late September,
after which Trump doubled down on his threats to tax all Chinese
imports. Such threats, Zhong said, will not lead China to back
down and offer the US concessions.

“There is a view in the US that so long as the US keeps
increasing tariffs, China will back down. They don’t know the
history and culture of China,” he said.

“This unyielding nation suffered foreign bullying for many
times in history, but never succumbed to it even in the most
difficult conditions,” he continued.

“The US should not underestimate China’s resolve and
will.”

Zhong’s comments came just a few hours after President
Trump once again accused China of taking advantage of the US over
trade. 

“We can’t have a one-way street,” Trump said during a press
conference to discuss
the resignation of UN Ambassador Nikki Haley on Tuesday
afternoon.

“It’s got to be a two-way street. It’s been a one-way
street for 25 years. We’ve got to make it a two-way street. We’ve
got to benefit also,” he told reporters.

Alongside increasing tariffs, communications between the
two sides have become more and more strained in recent
weeks. China
in September called off planned talks between mid-level
officials, and this week US Secretary of State Mike Pompeo
exchanged displeased words with Chinese foreign minister Wang Yi
during a trip to Beijing.

“Recently, as the US side has been constantly escalating
trade friction toward China, it has also adopted a series of
actions on the Taiwan issue that harm China’s rights and
interests, and has made groundless criticism of China’s domestic
and foreign policies,” Wang said at a press conference.

“We demand that the US side stop this kind of mistaken
action.”

Pompeo hit back, saying the US has “great concerns about
the actions that China has taken.”

A currency war brewing?

Away from the escalating tensions over trade, the US
Treasury has shown new concern about China’s devaluation of the
renminbi, an action it believes Beijing is using to strengthen
its hand with regards to trade by making Chinese goods
cheaper.

“As we look at trade issues there is no question that we
want to make sure China is not doing competitive devaluations,”

Treasury secretary Steven Mnuchin said in an interview with the
Financial Times published Wednesday.

“We are going to absolutely want to make sure that as part
of any trade understanding we come to that currency has to be
part of that.”

Trump has frequently criticized China for his belief that
Beijing is artificially weakening the its currency to make
Chinese exports more competitive, something he believes China is
doing to hurt the US economy.

In August,
he claimed that Beijing is a “currency manipulator.”