People's Bank of China (PBoC) will sell RMB30 billion (US$4.27 billion) worth of Yuan-denominated securities in Hong Kong on August 14 - Photo: Special

JAKARTA (TheInsiderStories) – People’s Bank of China (PBoC) will sell RMB30 billion (US$4.27 billion) worth of Yuan-denominated securities in Hong Kong on August 14, to improve the yield curve the bonds, the central bank announced today (08/06). It said, the operation would commence with the issuance of central bank bills.

“The issue includes RMB20 billion three-month and RMB10 billion one-year bills,” said PBoC in an official statment.

The Bank also declared, in consideration of reasonably adequate liquidity in the current banking system decided not to conduct reverse repo operations on Tuesday.

PBoC’ bottom line of seven yuan per US dollar has been challenged a number of times since 2015, the year the central bank sharply devalued the Remimbi. Chinese exchange rate has been under tight management and is permitted to trade 2 percent.

Commenting on the Chinese monetary policy, United States (US) President Donald Trump rated that the Yuan slide as a ‘currency manipulation” and urged the Federal Reserve (Fed) to counter the Chinese action.

Some analysts said, China take the action to counter Trump’ policy of imposing a 10 percent tariff on $300 billion of Chinese products.  On August 1, Trump announced US another tariff on Chinese goods starting Sept. 1. The announcement is estimating will escalating the two countries’ festering trade dispute.

He blamed China for not following through on stopping the sale of fentanyl to the US or purchasing large quantities of farm goods such as soybeans. The move immediately sent stock prices sinking and sending the yield on the 10-year Treasury note to its lowest level since 2016.

Washington has already applied tariffs of 25 percent on $250 billion worth of goods from China. China retaliated with tariffs on $110 billion in American goods, including agricultural products, in a direct shot at Trump supporters in the US farm belt.

Trump’ threats come after a US delegation returned to Washington from what the White House described as “constructive” trade talks. The negotiations were expected to resume in Washington in September, though exact dates were not announced.

Trump issued the tariff threat in a series of tweets. He also tweeted “we look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!”

“Our representatives have just returned from China where they had constructive talks having to do with a future trade deal. We thought we had a deal with China three months ago, but sadly, China decided to renegotiate the deal prior to signing,” he said.

Trump tweeted more, “During the talks the US will start, on September 1st, putting a small additional Tariff of 10 percent on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25 percent.”

The world’ two biggest economies are locked in a trade war over US allegations that Beijing uses predatory tactics — including stealing trade secrets and forcing foreign companies to hand over technology — in a drive to overtake American technological dominance.

Talks had broken down in May after the US accused the Chinese of reneging on earlier commitments. Trump has insisted that the tariff war is hurting China but not the US.

But his administration is providing $16 billion in aid to American farmers — on top of $11 billion last year — to offset sales lost after China imposed retaliatory tariffs on soybeans and other US farm products.

US$1: RMB7.02

by Linda Silaen, Email: linda.silaen@gmail.com

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