### POV: US TSY UNLIKELY TO DECLARE CHINA A...>

CHINA: ### POV: US TSY UNLIKELY TO DECLARE CHINA A CURRENCY MANIPULATOR

Before he became President Donald Trump noted that he would declare China a FX

manipulator on day 1 in office, he has failed to do so & the US Tsy will likely

stop short of declaring China an FX manipulator in its semi-annual report (due

April 18). The US Tsy focuses on 3 criteria. 1) A sig. trade surplus with US (at

least $20bln), 2) a sig. current a/c surplus (>3% of GDP) 3) persistent &

one-sided currency intervention (> 2% of GDP).

- As of the Oct 2017 report China was on the "monitoring list" which represents

countries which meet 2 of the 3 criteria or that contribute to a

disproportionate share of the US trade deficit.

- True, China breaches the trade restrictions outlined above, but its current

account deficit is narrowing and is under the threshold outlined by the Tsy.

- On the currency front China has been a USD seller, guarding against further

CNY depreciation in the wake the 2015 devaluation. USDCNY has fallen roughly 10%

from its late 2016/early 2017 peak and closed at ~6.3000 in front of the

elongated holiday weekend.