The US Treasury Department has removed China from its list of currency manipulators ahead of a new US-China trade deal. Chinese regulators have been accused of devaluing the yuan to make exports more competitive.
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The United States has dropped its designation of China as a currency manipulator, the US Treasury Department announced. The action comes as the first phase of a US-China trade deal is due to be signed in Washington on Wednesday.
The Trump administration branded China a currency manipulator in August, accusing Beijing of devaluing its currency to make exports more competitive. At the time, Chinese authorities had allowed the yuan to devalue against the US dollar to its weakest point in 11 years, according to the US Treasury.
The currency manipulator label was removed by the US Treasury in its semiannual currency report, which had been delayed three months by the Trump administration until currency commitments from China could be secured.
China commits to currency transparency
Treasury Secretary Steven Mnuchin said Monday that the Trump administration had dropped China's designation as a currency manipulator because of new commitments in the phase one trade agreement, including those intended to prevent China from undervaluing its currency to gain trade advantages.
Trade, tariffs and toilet brushes — 2019's top business stories
The US-China trade war reached a crescendo, a revised Brexit deal was signed, Boeing's 737 Max jets were grounded and Saudi Aramco launched the biggest ever IPO. DW recalls the top business stories of 2019.
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Busted flush?
The US president's voracious social media activity moved the markets and even provoked the Federal Reserve. Trump put pressure on the US central bank to lower interest rates to prevent a slowing economy just as he seeks reelection next year. China, another victim of Trump's ire due to the ongoing trade war, retaliated with billions in tariffs. In other news, this toilet brush became a bestseller.
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Tariffs delayed, no trade deal yet
Two years of trade tensions have seen the US and China levy tariffs on over $450 billion worth of each other's exports. Despite his harsh rhetoric, Trump delayed an increase in the tariff amount on some products and put off plans to penalize a further $156 billion worth of Chinese goods citing progress over a bilateral trade deal. In December, the two sides inked the first phase of the agreement.
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Huawei finished?
The Huawei blockade continued to be a major sideshow of the trade war. Amid concerns of possible Chinese espionage, Trump temporarily banned US firms from doing business with the telecoms giant. The debate spilled over to Germany where Chancellor Angela Merkel faced pressure to exclude the Chinese firm from bidding to build the country's 5G network. Despite this Huawei won one of the contracts.
IPO investors demand profits
2019 was the year investors pushed back on IPOs with over-hyped valuations. Ride-hailing app Uber hit the market in May with a valuation of $75.5 billion. It has since lost a third of its value due to concerns that the firm is burning too much money and not growing revenue fast enough. Shared workspace startup WeWork canceled its listing in September as investors questioned its business model.
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Tesla picks Germany
Tesla's decision to build its first European electric car and battery factory near Berlin was widely cheered in Germany. The €4 billion Gigafactory will bring thousands of jobs to the eastern state of Brandenburg and is also seen as a "gloves off" message to German automakers that have been late in committing to the new era of electromobility.
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New deal, new Brexit delay
British Prime Minister Boris Johnson hailed a revised EU divorce deal in October. Just like the previous Brexit agreement, which failed a parliamentary vote three times, his new plan was voted down on the first attempt. To break the paralysis, Johnson called a snap election, which he won with a landslide. Brexit is therefore back on, with the UK set to depart the EU at the end of January.
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Boeing's 737 Max in trouble
After two fatal crashes in five months, Boeing in March grounded its 737 Max jetliner worldwide after investigators questioned the role of the aircraft's MCAS anti-stall system. Several pilots had complained about difficulties in controlling the aircraft during takeoff. With 371 of the 2-year-old planes already in operation, the grounding impacted the profitability of dozens of airlines.
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Overhaul at Deutsche Bank
In July, Germany's biggest lender, Deutsche Bank, announced a radical restructuring including the loss of 18,000 jobs globally and the creation of a bad bank to offload toxic assets. The firm, which has been trying for years to improve profitability, shed its equities sales and trading business. Instead, it plans to refocus on its German and European business.
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Saudis break IPO record
The most profitable story of the year was this month's launch of Saudi Aramco's IPO. The on-off sale of 1.5% of the world's biggest oil company finally went ahead but only to Saudi and regional investors. A simultaneous overseas listing was abandoned amid foreign investor concerns. On its first trading day, Aramco shares climbed 10% giving the oil giant a market valuation of around $1.88 trillion.
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Bayer's bosses in the dock
German chemicals giant Bayer faced a shareholder revolt in April over the way the company handled the acquisition of US rival Monsanto. Bayer's stock fell 30% in the six months after the takeover as it emerged that Monsanto was facing thousands of lawsuits that claimed its Roundup weedkiller caused cancer. Despite the outrage, Bayer's supervisory board kept supporting CEO Werner Baumann.
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Sun worshippers burned
In September, 150,000 holidaymakers were left stranded when travel giant Thomas Cook went bust. The UK government launched its largest peacetime repatriation of tourists. Its German subsidiary, responsible for around 40% of the group's revenues, was also forced to file for bankruptcy to protect itself. The government stepped in to compensate German tourists after an insurance fund ran out of cash.
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Will Lagarde do whatever it takes?
After Mario Draghi's eight-year term ended in November, Christine Lagarde stepped in to head the European Central Bank. The former IMF chief has yet to disclose much about her plans for eurozone monetary policy but has already called for countries using the single currency to boost public spending and investment to arrest a potential downturn next year.
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Mnuchin said China had made "enforceable commitments to refrain from competitive devaluation while promoting transparency and accountability.''
Although now off the currency blacklist, China remains one of 10 countries the US Treasury says need to be on a watchlist, meaning that Beijing's currency practices will continue to be closely monitored.
The yuan reached a five-month high on Monday ahead of this week's signing of the phase one US-China trade deal, according to the Reuters news agency.
Criticism from Democrats
On Monday, Democratic Senate Minority Leader Chuck Schumer criticized the move by the Treasury Department, saying the Trump administration was "backing down" from putting pressure on China's unfair economic practices.
"China is a currency manipulator — that is a fact," Schumer said in a statement released by his office. "Unfortunately, President Trump would rather cave to President Xi [Jinping] than stay tough on China."
However, the currency manipulation designation in August was also seen as merely a symbolic move. It would have ultimately required the US to enter into negotiations that could have led to sanctions, something the Trump administration was already doing in its trade war with China.
