China, US plan economic talks

China and the United States have agreed to hold economic talks as tensions between the world’s two biggest economies continue to rise.

Top officials will meet in the US next month to discuss differences over trade and currency policies, says the US Treasury Department.

The United States has accused China of keeping the value of its yuan currency artificially low to help exporters sell products or services abroad.

China is the world’s largest exporter.
Currency wars

The growth of the Chinese economy over the past few years has been powered by the success of its export sector.

However, China’s major trading partners, notably the European Union and US, have raised concerns that the government in Beijing has been engineering an economic strategy that gives an unfair advantage to the country’s manufacturers, by keeping its currency artificially low.

A lower valued currency makes Chinese goods cheaper in foreign markets compared with other competitors.

China has maintained that a sudden change in its currency policy will be detrimental not only to its export sector but to its overall economy.

Beijing has been allowing the yuan to slowly appreciate against the US dollar, but not as much as the decision-makers in Washington and Brussels would like. The Chinese currency has gained almost 5% against the US dollar over the last year.

However, analysts say that despite that gain, the yuan remains undervalued, compared to currencies like the euro and US dollar.
Source: BBC

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