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Project Syndicate: Devaluing the yuan wouldn’t help China win the trade war

LONDON (Project Syndicate) — Officials at the People’s Bank of China (PBOC) have long insisted that “China won’t weaponize the yuan.” And yet, implicit in their promise not to manipulate the currency for strategic ends is their ability to do so if they so desired.

China’s monetary policy has come to the fore now that U.S. President Donald Trump has imposed import tariffs on a range of Chinese goods. Many are wondering if China will respond to Trump’s trade war by threatening a currency war. If it does, the world should call its bluff.

As the Trump administration ratchets up tariffs on Chinese goods, many observers have begun to wonder if China will respond with a strategic currency devaluation to boost the competitiveness of its exports.

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