When Will China Start to Devalue the Yuan?
Unless Beijing brings out the big stimulus, weakening the currency is the easiest way to offset Trump’s tariffs.
When will China devalue the yuan?
Photographer: Wang Zhao/AFP/Getty Images
When President Donald Trump launched his first trade war in 2018, China weakened the yuan to offset US tariffs imposed on its exporters. But the sharp depreciation did not come about immediately. President Xi Jinping only resorted to this tool after complaints to the World Trade Organization, retaliation in kind, and initiating trade talks all failed to reach any resolution.
Now that the two are engaged in another round of hostilities, when Beijing will devalue the yuan — and by how much — is a matter of great concern. Its actions could ignite a global currency war and exacerbate fears of capital outflow from emerging markets.