Bloomberg reported that Chinese officials are studying the impact of yuan depreciation on two fronts. Firstly, analysis was taken to look at using currency depreciation as a weapon in the trade war with the US. Secondly, it’s also studied how yuan depreciation could help offset any trade deal with US that curb exports.
However, one important point to note is that the source for the information is obviously unnamed. And further than that, Bloomberg just said it’s from “people familiar with the matter”. So it looks unlikely that the information is from any Chinese officials.
At the same time, it’s firstly seen by many that yuan devaluation could destabilize the China’s own markets, and that could do more harm to itself than to the US. And more important, China has been trying to portrait itself as rule follower that complies with the WTO book. It keeps blaming the US for unilateralism and protectionism and tries to to use that to draw international support. Devaluation of the Yuan will put China up against other countries too.
President Xi Jinping probably won’t mind US President Donald Trump reiterating the label that China is a currency manipulator. But he most certainly doesn’t prefer other countries to jump on that bandwagon.
So, while the news is currently in Bloomberg’s headline, its accuracy is suspectable.
