One of the hallmarks of the recent presidential campaign is the president-elect’s accusations that China is “the single greatest currency manipulator that’s ever been on this planet.” Donald Trump is neither a lone voice nor a partisan adversary in citing China for manipulating its currency to gain an (unfair) export advantage in global commerce.
The issue is a bipartisan one that has loomed large since Democrat Sen. Chuck Schumerand Republican Sen. Lindsey Graham co-sponsored the first Chinese currency bill in 2005. While the bill did not become law, it has been on the radar screen of both Congress and the executive branch for more than a decade.
To be cited for unfair currency practices, however, a country has to have a trade surplus larger than $20 billion, or 0.1 percent of gross domestic product; a trade surplus with the U.S. that is more than 3 percent of that country’s GDP; and purchases of foreign currency amounting to more than 2 percent of the country’s GDP in a one-year period. By that definition, China does not qualify as a currency manipulator, although China, Japan, Germany, South Korea and Taiwan are all presently on a “watch list” by the administration.
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