US and Chinese officials have reached to an agreement over important issues and have discussed exchange rates in the final negotiation rounds so as to end the trade war, Governor of Central Bank of China, Yi Gang mentioned about it on Sunday.
Key trade delegates from China and America are maintaining high-level talks to discuss the complex trade deal from the past few months to put an end to the trade war. The trade war is going on between the two largest economies of the world from 2018. The President of the US had increased the tariff hike on Chinese goods such as steel and aluminum goods from March 2018 onwards.
Delegates from both the sides have discussed issues related to yuan to follow the recent commitments made by Group20 (G20) nations which state not to engage in competitive depreciation and to talk on currency issues, Central Bank Governor Yi Gang addressed during a press conference held in Beijing on Sunday said. However, he has not specified on which key issues both the countries have agreed upon.
The delegates have negotiated on the market-oriented foreign exchange mechanism and its importance along with the necessity of revealing the information to International Monetary Fund standards, Yi Gang mentioned. Yi Gang has been the member of the Chinese team which has been headed by Chinese Vice Premier Liu He. They participated in the recent round of talks that were held in Washington to negotiate the crucial trade issues along with US Trade Representative Robert Lighthizer and Stephen Mnuchin the Treasury Secretary.
Currency manipulation issue has now been the part of the ongoing negotiation talks so as to resolve their trade conflict, at the same time the US seeks China to keep up the promise so that they don’t depreciate the currency in order to achieve effectiveness or counter the impact of tariffs. Although China has mentioned that to end any trade deal, there should be a fair and equal approach from both sides.
Yi Gang has reaffirmed that China will never make use of exchange rates for competition and will not implement them to boost exports or use them as tools for the trade. The exchange rates of China are increasingly market-oriented, Yi Gang mentioned.
Hong Kong-based economist at ING Bank NV, Iris Pang mentioned that considering the entire comment and also about Yi note of using counter-cyclical measures, “For me, it looks like there will be no considerable changes on the yuan mechanism.”
The yuan has increased by 2.3 percent against a group of trading associates, the currency for the year 2019 is full of hopes as China and the US are moving towards resolving their trade conflict.
On Tuesday, Premier Li Keqiang reiterated that the government will move to enhance the mechanical formation of the exchange rate. This sentence was not present in equivalent reports from past 2 years, and now it has been mentioned again. This indicates that the currency reform might be on the policy agenda soon.