Via S&P:
China would probably agree to a side deal on currency policy if it rests on allowing market forces to play a greater role, said S&P Global Ratings today in a report titled “Trade Deal Entree With A Side Of Currency.” The U.S. has become fond of including currency provisions in its recent trade agreements and these often require that countries refrain from exchange rate manipulation and competitive devaluations. Given that the U.S. Treasury recently labeled China as a currency manipulator, it would be no surprise should currency policies form part of any U.S.-China trade deal.
Shaun Roache, Asia-Pacific chief economist at S&P Global Ratings said “China is likely to agree to currency provisions if they follow recent precedents, such as the United States-Mexico Canada Agreement because it is unlikely to require any major change in policies. For some time, China has adopted a light touch with the exchange rate and allowed more flexibility versus the U.S. dollar.”
