By South China Morning Post | Created at 2025-03-04 13:31:31 | Updated at 2025-03-04 17:11:45
3 hours ago
US President Donald Trump’s latest accusation of China’s trade advantage via yuan depreciation suggests his sights are set on reducing the US trade deficit, according to analysts who also noted that a priority of China’s central bank is stabilising the currency against the backdrop of a strong dollar and mounting tariff risks.
They contended that Trump’s warning on Monday – that China and Japan “can’t continue to reduce” their currencies because it is “unfair” to the US – clashes with Beijing’s actual efforts to prevent a sharp yuan depreciation. Japan also refuted Trump’s allegation.
“Trump’s trade and currency policies are contradictory,” said Raymond Yeung, chief Greater China economist at ANZ Bank. “Higher tariffs fuel higher inflation, weaken rate-cut expectations, and strengthen the dollar, putting depreciation pressure on other currencies.”
He added that, without intervention from the People’s Bank of China, the yuan would face even steeper depreciation, noting that the Chinese currency has held up better than other Asian counterparts.
Yeung also noted that Trump’s statement reflected his “concerns about the US trade deficits” with certain countries.
Japanese Finance Minister Katsunobu Kato said on Tuesday that Tokyo was not employing policies to weaken the yen, and Prime Minister Shigeru Ishiba stressed that they were not pursuing a “currency devaluation policy”.
