China could be designated in next FX report, Brad Setser notes

China could be designated in next FX report, Brad Setser notes
Treasury approach may designate China

Brad Setser discusses the implications of the Treasury retaining its current thresholds for assessing the 2015 trade enforcement act. According to Setser, if the Treasury uses FX settlement rather than the PBOC balance sheet, China would be designated in the next foreign exchange report.

Earlier this year, Brad Setser reported that German auto exports to China had dropped sharply, posing a risk of around 0.6 percentage points of GDP and raising concerns about external reliance here. In a separate note, he observed that European leaders view current trade relations with China as unbalanced and unsustainable here. These developments have kept policymakers’ attention focused on China’s trade and currency practices.

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