China To Avoid Using Yuan Rate As Tool In Trade Conflict With US - Central Bank

China to Avoid Using Yuan Rate as Tool in Trade Conflict With US - Central Bank

China will not use the exchange rate of the yuan, its national currency, as a tool in its trade conflict with the United States, Li Bo, head of the People's Bank of China's Monetary Policy Committee, said on Tuesday.

BEIJING (Pakistan Point News / Sputnik - 21st August, 2018) China will not use the exchange rate of the yuan, its national currency, as a tool in its trade conflict with the United States, Li Bo, head of the People's Bank of China's Monetary Policy Committee, said on Tuesday.

"The Yuan rate is mainly defined by the market demand. We are not going to use the yuan rate as a tool in trade conflicts or any other external problems," Li said at a press briefing.

He added that while the central bank was supporting the flexibility of the yuan exchange rate, it could ensure the stability of the foreign Currency market due to a cautious macroeconomic policy.

"After all, the rate is defined by the economic base. China's economic base is solid. We have confidence and every possibility to keep the yuan rate at a rational level," Li said.

While yuan dropped almost five percent against the US Dollar in 2018, it recently strengthened after falling to its record-low since mid-2017. On Tuesday, the central bank set the exchange rate at 6.8360 yuan per dollar, compared with 6.8718 of the previous day.

Li's comments followed US President Donald Trump's claims that China was "manipulating" the yuan amid the trade conflict between the two countries.

The US-China trade dispute started several months ago as Trump announced tariffs on imported steel and aluminum in order to fix the US trade deficit with China, caused by the fact that import from China largely exceeded US export.

This week, Chinese and US trade officials will meet in Washington to resume trade negotiations. The previous meeting was held in May and resulted in reaching a consensus, but the deal collapsed as Trump charged Chinese goods with 25 percent import duties, and China responded with the same move.