China’s Currency Catch-22
As the Trump administration ratchets up tariffs on Chinese goods, many observers have begun to wonder if China will respond with a strategic currency devaluation to boost the competitiveness of its exports. But, despite despite possessing a powerful financial and monetary arsenal, Chinese policymakers have no good options.
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LONDON – Officials at the People’s Bank of China (PBOC) have long insisted that “China won’t weaponize the renminbi.” And yet, implicit in their promise not to manipulate the currency for strategic ends is their ability to do so if they so desired.