August 2019 | Page 3 of 3 | View From The Top

1.China Allows Currency to Weaken.

China Uses Currency as Weapon in Trade War, Rattling Markets

By Ana Swanson, Alexandra Stevenson and Jeanna Smialek

Aug. 5, 2019

WASHINGTON — The trade war between the United States and China entered a more dangerous phase on Monday, as Beijing allowed its currency to weaken, Chinese enterprises stopped making new purchases of American farm goods and President Trump indicated he would look for ways to retaliate.

The escalation shook world markets on Monday, as nervous investors looked for safe places to park their money. Wall Street suffered its worst day of the year, with the S&P 500 closing down nearly 3 percent. Selling was especially heavy in the trade-sensitive technology, consumer discretionary and industrial sectors. Yields on United States Treasuries, which fall as prices rise, dropped as investors sought safety in government-backed bonds. Benchmark indexes in Asia and Europe also fell.

On Sunday, the People’s Bank of China, the country’s central bank, allowed its currency to weaken past the psychologically important point of 7 to the American dollar for the first time in more than a decade. In an unusually blunt statement, the bank blamed the currency fall on Mr. Trump’s “unilateralism and trade protectionism measures and the imposition of increased tariffs on China.”

Mr. Trump’s decision to impose additional tariffs on Chinese goods also prompted Chinese enterprises to halt purchases of American agricultural goods, according to China’s state-run Xinhua News Agency, which called the president’s proposed tariffs a “serious violation” of an agreement reached in June with Chinese President Xi Jinping.