FAST FIVE: Not So Fast: China Will Not Allow Use Of Yuan As Bargaining Chip To Resolve Trade War

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With market optimism brimming that it's just a matter of days, if not hours, before the US and China reach a truce in the ongoing trade war – even though there have been countless accurate analyses in recent weeks explaining why an actual trade deal is impossible since the object of contention is not trade at all but China's creeping technological dominance, something which Beijing will never voluntarily concede – Beijing has poured cold water over expectations of an imminent deal when China's Ministry of Foreign Affairs said on Wednesday that China will not use the yuan's exchange rate as a bargaining chip to resolve the trade war with the United States, Caixin reported Speaking at a press briefing, foreign ministry spokesman Geng Shuang, said that China won't resort to currency depreciation for competitive purposes in trade and hopes the US can respect market rules and not politicize currency issues.

The Ministry's terse response also follows an earlier report from SCMP, according to which Beijing would likely accept conditions requiring a “stable” yuan to be included in the memorandum of understanding.

“Analysts” quoted by the SCMP pointed out that by insisting that China change its currency-management strategy to prevent the yuan from depreciating past a certain level, Washington would be playing into Beijing's hands.

“From China's perspective, this would also be acceptable,” he added.

“Yuan stabilisation will be the optimal solution to balance out risks of capital outflow, trade negotiations and China growth slowdown,” he added.

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