China shocks America

Zhou Jun, head of the International Department of the People's Bank of China (PBOC), said Tuesday that the yuan is at an appropriate level now and the turmoil of rising and falling will not necessarily cause unregulated capital flows.

The yuan has fallen about 2.4 percent since US President Donald Trump threatened this month to impose more tariffs on Chinese goods from September 1, although there are indications that China is trying to control the decline.

"The current level of the yuan's exchange rate is appropriately in line with the fundamentals of the Chinese economy, market supply and demand," Zhou told Reuters in an interview.

China was "shocked" by the US Treasury's move last week to classify Beijing as a currency manipulator, hours after China allowed the yuan to fall below a key support level to its lowest level in more than a decade.

But Zhu stressed that China is capable of "dealing with all scenarios" caused by Washington's recent classification of Beijing as currency manipulation.

In the short term, external shocks will also play a role by affecting the yuan's movements, she said.

"However, as long as the yuan moves in an orderly manner based on market supply and demand, such moves in either direction do not necessarily mean unregulated capital flows."

The Chinese official noted that the yuan will continue to be supported by China's strong economic fundamentals, stable debt rate, containment of financial risks, adequate foreign exchange reserves and favorable interest rate differentials between China and large economies.

"In the medium and long term, we have full confidence in the yuan as a strong currency," she said.

Growth of foreign investment
Last Friday, the IMF stuck to its assessment that the value of the Chinese yuan was largely in line with economic fundamentals, in a statement contrary to the position of America, the largest contributor to the Fund, which last week classified China as "currency manipulator" after allowing the yuan to fall below seven yuan against The dollar.

"Huge amounts of money from China and other parts of the world are pouring into the United States thanks to safety, investment and interest rates. We are in a very strong position," Bush said last week, while White House economic adviser Larry Kudlow said Tuesday that China's economy was collapsing.

But recent official data showed foreign investment in China has grown in the past seven months.

According to data from the Ministry of Commerce on Tuesday, the next foreign direct investment to China reached about 79 billion dollars between January and July last year, registering a growth of 3.6% compared to the same period last year.

In the past seven months, a total of 24,050 new foreign-funded enterprises have been established, the official Xinhua news agency reported.