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China’s currency weakens as trade-war worsens

China is deliberately allowing its currency to fall after the US announced $300 billion worth of new tariffs.

A full-blown currency war is looming as China’s yuan drops below a seven-to-one US dollar suggesting they do not anticipate a resolution to the trade war.

Trade and Tourism Minister Simon Birmingham has said the tariffs could be in breach of World Trade Organisation rules.

He tells Ross Greenwood the current trade war is harming global trade.

“We would rather these sorts of trade tensions between, especially some of our major trading and investment partners, weren’t happening.

“What occurred is that the rate of growth globally in trade volumes has slowed quite dramatically.”

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Bloomberg’s Economic Coverage in Asia Managing Editor Malcolm Scott tells Ross “this is a significant move”.

“It’s the psychology of this breach of the seven-level that’s so significant.

“It’s almost a signal to Mr Trump… this does seem like it’s a change in tone for China’s management of the trade war with the US.

“If the Chinese stops playing nice this does become very worrying for the global economy.”

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