The Trump team is releasing news that the
new US president may honor his campaign pledge to include China as a currency
manipulator,But may not fulfill another promise: the Federal Reserve Chairman
Janet Yelen pull down.
In a Bloomberg TV interview Friday, Trump's
economic adviser Judy Shelton replied, "When he was asked whether Trump
would really include China as a currency manipulator, he said, "He said,
and Trump argued against currency manipulation by trade opponents.
Shelton also said that the Fed will remain
independent in the future, he could not imagine why Yellen will not complete
the current term. However, he revealed Trump's low interest rate on the Fed to
maintain dissatisfaction, said Trump does not support the establishment of a
low interest rate based on the "false economy."
Trump economic adviser Judy Shelton on
Friday hinted that China will determine the exchange rate of the country, he
also said Trump is a "say to do" people. Trump has pledged to declare
China the currency manipulator on the first day of his presidency, threatening
to impose a high tariff of 45% on Chinese imports. Once it is determined that
there is exchange rate manipulation in a country, the United States will not
only exert pressure on the government to adjust its exchange rate policy
through the IMF, it is more likely to retaliate by means of trade. Trump after
the election may exacerbate the outflow of capital in China, thereby increasing
the pressure on the RMB depreciation in the medium term. 45% of the tariff!! At
this time a lot of partners to panic. However, a careful analysis, even though
the United States is China's largest export target, but China is actually on
the US trade exposure is shrinking, according to Morgan Stanley estimates, even
with 45% punitive tariffs, China's total exports Will only drop 13%. The United
States accounted for 17 percent of China's total exports, up from 21 percent
five years ago, but contributed 43 percent of China's trade surplus.
In the first nine months of 2016, China's
exports to the United States were in the form of telecommunications equipment
($ 56 billion), office facilities ($ 47 billion), electronics ($ 33 billion), clothing ($ 24 billion) ($ 16 billion).
China's exports to the United States accounted for 39% of furniture exports, followed by metal ores and scrap metal (33%),
footwear (33%), telecommunications and recording equipment (29%), Handbags
(26%).
If the United States to raise tariffs on
China Chinese exporters because of their profits are not high (5%), so the
ability to absorb US tariffs to improve the impact of limited capacity. The
increase in tariffs will be fully spread to the prices of Chinese exports.
Suppose that US tariffs on China increased from the current 2.8% to 15%, 30%
and 45% (see the Republican March debate:
edition.cnn.com/2016/03/10/politics/republican-debate-tran-full China's exports
to the United States will be more hit, will decline 21%, 46%, 72%; However,
China's total exports in the medium term corresponding to the decline in the
rate of much smaller, respectively, 4% 8%, 13%.
The United States a substantial increase in
tariffs may not occur immediately Trump government to raise tariffs on the
matter before the first communication with the domestic and foreign, Congress
passed, but also through the domestic long judicial review. In addition, WTO is
a series of mechanisms to resolve trade disputes, the United States as a WTO member
should give priority to choose WTO to resolve trade disputes. So the United
States is unlikely to really in the short term to China to implement a more
tightening of trade policy. But if China's export growth falls drastically, a
fall in trade surpluses will deter yuan demand, which could accelerate the
devaluation of the renminbi, especially in the face of speculative sentiment
and the effects of cross-infection. Of the bad big.
