China stabilises currency amid high tensions with US
Beijing warns India of reverse sanctions for blocking Huawei
BEIJING/ NEW DELHI
China stabilised its currency on Tuesday, suggesting it might hold off from aggressively letting the yuan weaken as a way to respond to US President Donald Trump’s tariffs, in a trade war that is wounding the world economy. The yuan declined to 7.0562 to the dollar before strengthening back to 7.0297 in the afternoon. That came a day after Beijing sent financial markets tumbling by allowing the currency to fall to an 11-year low. A weaker yuan can help neutralise US tariffs on Chinese goods by making them more price-competitive on international markets.
The Trump administration responded on Monday by officially declaring that China improperly manipulates the yuan’s value. That opens the way to possible new penalties on top of tariff hikes already imposed on Chinese goods in a fight over Beijing’s trade surplus and technology policies. The sight of the world’s two economies engaging in a tit-for-tat economic dispute has shaken investors. So the fact that China let its currency stabilise on Tuesday offered some hope that the sides might try to keep the situation from escalating further. Stock markets turned higher.
The ruling Communist Party’s main newspaper accused Washington of deliberately destroying the rules-based international order and jeopardising economic cooperation. It accused the Trump administration of using American families as hostages in trade talks, since tariffs on imports tend to increase a country’s consumer prices at home.
Meanwhile, China has told India not to block its Huawei Technologies from doing business in the country, warning there could be consequences for Indian firms operating in China, sources with knowledge of the matter said. India is due to hold trials for installing a next-generation 5G cellular network in the next few months, but has not yet taken a call on whether it would invite the Chinese telecoms equipment maker to take part, telecoms minister Ravi Shankar Prasad has said.
Huawei, the world’s biggest maker of such gear, is at the centre of a geopolitical tug-of-war between China and the United States. US President Donald Trump’s administration put the company on a blacklist in May, citing national security concerns. It has asked its allies not to use Huawei equipment, which it says China could exploit for spying.
Two sources privy to internal discussions in New Delhi said India’s ambassador in Beijing, Vikram Misri, was called to the Chinese foreign ministry on July 10 to hear China’s concerns about the US campaign to keep Huawei out of 5G mobile infrastructure worldwide.