The Washington Post | Tue, Aug 6, 2019
by Lawrence H. Summers
Treasury Secretary Steven Mnuchin on Monday named China a currency manipulator — the first manipulation designation in a generation — and said he would ask the International Monetary Fund to intervene. Mnuchin made clear he was doing President Trump’s bidding after the Chinese central bank allowed its currency to decline by more than 2 percent below the psychologically important level of seven yuan, or renminbi, to the dollar.
Currency manipulation is an important issue and has been recognized as such by the international community. When a country intervenes in the foreign-exchange market to depress its currency so as to promote exports and discourage imports, something equivalent to imposing tariffs on imports and providing subsidies to exports is happening. This is especially of concern when, as in the case of countries previously deemed manipulators, a country is running a substantial trade surplus.