- The Trump administration is criticizing China for exchange-rate manipulation
- The yuan, however, has not depreciated significantly against the dollar
- The West also engages in monetary policy that affects exchange rates
- Washington seems unsure whether it wants a strong or weak yuan
The trade dispute between Washington and Beijing is not over, but most observers believe that a satisfactory compromise is not impossible. This would be good news for the entire world – so good that fears about a global slowdown have receded and optimism has been prevailing until very recently. Consistent with Mr. Trump’s pragmatic, comprehensive approach to trade matters, the administration has also devoted considerable attention to exchange-rate policies, a strategy that the Chinese are supposed to have used and could perhaps use in the future to mitigate the consequences of lower (traditional) trade barriers.