Yellen Calls Taiwan “Currency Manipulator” And Lets China Get Away | Taiwan News

TAIPEI (Taiwan News) – In an apparent disconnect with the Biden administration’s vow to hold Beijing accountable for unfair trade practices, US Treasury Secretary Janet Yellen appears poised to refuse to label China as a currency manipulator and enforce designation to Taiwan instead.

At Biden’s first official press conference as president last month, he pointed out that he told Chinese President Xi Jinping (習近平) during a phone call that he would insist that China respect the international rules for fair competition and trade and respects human rights.

Biden appointed Taiwanese-American Katherine Tai (戴 琪) as United States Trade Representative (USTR), and talks on a Trade and Investment Framework Agreement (TIFA) between the United States and Taiwan would be scheduled for this year.

In 2020, the new Taiwan dollar climbed 5.6% against the US dollar. This year, the trend continued, with the Taiwanese currency reaching NT $ 27.711 per dollar on March 3, setting a record not seen since 1997.

Likewise, the Chinese yuan has strengthened considerably against the greenback, posting a gain of 6.5% in 2020. However, during the first quarter of 2021, both currencies weakened slightly against the US dollar. , the Chinese currency rising from 6.532 yuan to the dollar. January 1 to 6.547 yuan on April 12 and the New Taiwan dollar rising from NT $ 28.054 on January 1 to NT $ 28.394 on April 12.

Sources familiar with the matter told Bloomberg that Yellen plans not to label China as a currency manipulator in the first biannual currency report, but will label Taiwan as such. The news site suggested that avoiding listing China as a currency manipulator is aimed at “avoiding another clash with Beijing.”

The three Treasury criteria for qualifying a country as a currency manipulator are: having a trade surplus with the United States greater than US $ 20 billion over 12 months, a global current account surplus of at least 2% of GDP of the country over this period and net purchases of foreign currency amounting to at least 2% of its GDP over one year.

The United States recently called China a currency manipulator in 2019, but the Trump administration removed the tag in January 2020 in exchange for Beijing’s pledge to refrain from devaluing its currency to make its products cheaper. for foreign consumers. The first phase of Washington’s trade deal with Beijing also includes the latter’s commitment not to engage in competitive currency devaluations.

Taiwan was included on the watch list late last year after the first two criteria were met. The Central Bank of Taiwan recently announced that net foreign currency purchases in 2020 will have reached $ 39.1 billion, representing 5.84% of Taiwan’s GDP and meeting the third criterion.

Central Bank Governor Yang Chin-long (楊金龍) was quoted by Liberty Times as candidly saying that “it is possible” that Taiwan is classified as a currency manipulator. However, Yang said that last year Taiwan’s exports to the United States reached $ 29 billion, mainly due to the impact of the United States-China trade war and the increased US demand for Taiwanese telecommunications products.

Yang claimed that the increase in trade had nothing to do with the central bank’s handling of foreign currencies, but was due to the pandemic prompting the US Federal Reserve to implement unlimited quantitative easing.

He said the ripple effect of the influx of funds posed a threat to the stability of Taiwan’s financial market. He said the Central Bank intervened in the currency market on the basis of its statutory responsibility to maintain market stability.

He said the Central Bank of Taiwan should contact the Treasury on the matter. Yang argued that last year was unique and recommended that the United States examine the rationality of its top three criteria in this case.

At her confirmation hearing in January, Yellen said she was considering changing the label’s criteria, saying bilateral trade deficits should not be seen as “a single catch-all measure.” Since taking the helm, there have been other reports that her team is considering lowering the thresholds for the label set under the Trump administration.

Janice J. Kostka