Beijing prepares to play rough with Washington even after last week’s trade negotiations in Shanghai, China. Later after the US team went back to the US, Trump fired a series of tweets against China out of frustration.
Just recently, Beijing has sacrificed the yuan for its counterattack to Washington. The Chinese currency dipped to its lowest level in over ten years against the US dollar.
The retaliation started when the Chinese government demanded state-owned enterprises to halt imports. The suspension mainly targeted US agricultural goods.
China’s move came a few days after the United States President Donald Trump said that he will be adding 10% more tariffs on Chinese imports.
Donald Trump announced the fresh tariffs on a thread on Twitter last week. The series of posts attacked China’s promise about purchasing US farm goods and stopping the continuous Fentanyl problem in the States.
Trump finished the thread on a contrasting tone saying that Washington is looking forward to a comprehensive trade deal with Beijing and that the future for the two will be “very bright.”
Agricultural futures such as corn and soybeans took a dip soon after reports that China ordered to stop purchases. US agricultural contracts fell as low as 1.30 percent in today’s session.
A forex analyst said the fall of the Chinese yuan against the US dollar led the People’s Bank of China to allow depreciation.
China’s central bank has set its daily reference rate below 6.9. The level is the weakest since December 2018.
The recent escalation of trade conflicts paved a way for a currency war. China allowed its currency to weaken after vigorously defending it in the past.
The recent news also caused Asian shares to dive to six-months lows. A currency expert said that Beijing is using the yuan as a weapon against the US, dropping its diplomatic stance to defend itself from Washington.