Not true. China still heavily manipulates the exchange rate.
What I wrote is exactly what happened: China
reduced the level by which it intervenes in the value of its currency. Do words even have any meaning anymore??
Or, in Nobel Prize in Economics winner Paul Krugman's words:
Opinion | Trump’s China Shock
"Incidentally — or maybe it’s not so incidental —
while there are many valid reasons to criticize Chinese policy, currency manipulation isn’t one of them. China was a major currency manipulator 7 or 8 years ago, but these days if anything it’s supporting its currency above the level it would be at if it were freely floating."
"And think for a minute about what would happen to a country with an unmanipulated currency, if one of its major export markets suddenly slapped major tariffs on many of its goods. You’d surely expect to see that country’s currency depreciate, just as Britain’s has with the prospect of lost market access due to Brexit."
[...]
"
In other words, the Trump administration in its wisdom has managed to accuse the Chinese of the one economic crime of which they happen to be innocent."
Krugman got the Nobel Prize for his work in international trade.
Currency manipulation is usually defined as the competitive devaluation of a country's currency by its central bank selling the currency, which currency selling gives an export oriented country an unfair trade advantage against competitors.
China's currency policy in the past 5 years was the
opposite of that: they supported their currency by buying it, spending huge amounts of FX reserves doing so.
They just allow it to fluctuate in a 2% range now which makes it look more market driven. But it is still very tightly controlled through a variety of ways.
Until yesterday China controlled the exchange rate in an even tighter band as it artificially propped up its currency - as
@Papafox's chart visualized it. The RMB started "floating" more freely as a result of the change in the peg: it strengthened a bit meanwhile, with the Chinese central bank neither buying nor selling the currency.
Getting money in and out of China can be quite the task.
Capital controls, just like taxation or tariffs, are a sovereign right. China has no obligation to follow neoliberal capital flow policies. Just like the U.S. is free to restrict trade via tariffs, China is free to impose capital controls - like many other countries.
JFYI, the Danish central bank controls the value of the Danish Krone in a 2.25% band too, to peg the DKK to the Euro:
Is Denmark "manipulating" their currency too?
Anyway, in what universe is China
reducing the manipulation of their currency and allowing it to float more naturally is now an act of
more currency manipulation?
