Currency War: China Attacks the Dollar

Currency War: China Attacks the Dollar – German Newspaper

China's devaluation of the yuan could negatively affect the United States. This move by China’s authorities has caused uncertainty among US policymakers who have frequently blamed China for manipulating its national currency for a trade advantage.

A weaker yuan will increase the competitiveness of Chinese exports and might cause complaints among US manufacturers, media wrote.

China is seeking to establish its currency as an alternative currency to the US dollar in the international trade. In the future, its exports and imports are expected to be carried out not in dollars, but in the national currency.

According to DWN, China’s move is a clear sign that the country will ruthlessly enforce the interests of its export industries. It is an explicit warning to the US that it can no longer be responsible for pursuing a monetary policy independent from other states and should take into account their interests.

Currency War

The US central bank has long been preparing to raise US interest rates. This step is considered logical by many financial experts, but could have a significant effect on other countries and their currencies. This especially applies to exporters of raw materials, the prices of which would significantly react to the interest rate changes.

By devaluing its currency, Beijing demonstrates its unwillingness to accept the US rates’ increase, according to DWN. Should the interest rates rise further, China will oppose it and devaluate its currency against the dollar even further.

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