China is letting value of yuan slide to offset trade war tariffs, US Treasury Secretary Mnuchin says

US Treasury Secretary Steven Mnuchin on Saturday accused China of allowing the value of its currency to slide in a bid to offset the impact of Washington’s trade tariffs on the cost of its goods to American consumers.

“It’s not coincidental in my mind that the currency has moved from approximately 6.30 [yuan to the US dollar] to 6.90,” the official said on the sidelines of the G20 finance leaders’ meeting in Japan.

“Traditionally to manipulate a currency, official intervention in the foreign exchange market has to be conducted in a certain way. Intervening to support the currency’s exchange rate is not regarded as currency manipulation,” he said.

“However, when the market is expecting intervention because there have been interventions to support a currency for a very long time – whether by China or any other country – then when there is no intervention that could create a big market impact,” he said. “The decision not to intervene after intervening for a very long period of time may lead the market to view that there is a desire to have the currency to weaken.”

Mnuchin said also that Chinese companies were absorbing a significant part of the tariff rise to prevent price increases being passed on to US consumers. His comments came after US President Donald Trump said on Twitter on Friday night that the US was collecting billions of dollars because of the higher tariffs.

However, both those views have been challenged by economists, including those from the International Monetary Fund, which said in a report published late last month that the “tariff revenue collected has been borne almost entirely by US importers” and that “some of these tariffs have been passed on to US consumers”.