Forex News

Live Forex news from all over the world.

    Archives

Chinese Yuan Slips as US Threatens Sanctions on China Over Hong Kong

May 25, 2020 at 13:55 by Andrew Moran

Chinese 100-yuan notesThe Chinese yuan is extending its losses to jumpstart the holiday-shortened trading week. The currency is falling against its rivals on Monday after the White House threatened to slap sanctions on China over the government’s proposed implementation of national security laws on Hong Kong that reportedly threaten its autonomy. The heightened tensions come as the world’s two largest economies escalate their war of words over trade. Whether this is a new Cold War or another trade dispute, Beijing is facing a barrage of consequences at a time when it is trying to reboot the economy.

The National People’s Congress, China’s rubber-stamp parliament, will move forward with legislation that essentially bypasses Hong Kong’s legislature. President Xi Jinping and his administration have stated that the national security legislation is critical to protect the country following last year’s wave of protests across Hong Kong.

NPC spokesman Zhang Yesu told reporters at a news conference that Hong Kong is inseparable from China, and that it is “highly necessary” for the NPC to flex its constitutional power and ensure the safety of the public.

National security is the bedrock underpinning a country’s stability. Safeguarding national security serves the fundamental interests of all Chinese people, including our HK compatriots.

But regional critics say the law will likely give Beijing greater power to imprison opposition figures. In recent days, more than 200 political figures from the UK, Europe, North America, and Asia have condemned the legislation in a joint statement. The US was quick to rebuke the bill, titled “Establishment and Improvement of the Legal System and Implementation Mechanism for the Safeguarding of National Security in the Hong Kong Special Administrative Region.”

White House National Security Advisor Robert O’Brien told NBC News over the weekend that the US government will likely impose sanctions on China if it moves ahead with what has been described as the “death knell” for “the one country, two systems.” He warned that if Beijing installed the measures, Hong Kong could inevitably lose its status as a major hub for global finance.

It’s hard to see how Hong Kong could remain the Asian financial center that it’s become if China takes over. If all those things go away, I’m not sure how the financial community can stay there. They’re not going to stay in Hong Kong to be dominated by the People’s Republic of China, the communist party.

White House economic aide Kevin Hassett also confirmed economic penalties on China over its proposal.

China is facing additional criticism over its anti-dumping tariffs on Australia barley exports.

The possibility of another trade spat between the two economic superpowers seems to be growing. President Donald Trump has repeatedly threatened to sever ties with China. Despite fears over the phase-one trade deal being dismantled, administration economic advisor Larry Kudlow confirmed that it remains intact and that there is no need to renegotiate the agreement. It is unclear how China reacts after the president ordered the Federal Retirement Thrift Investment Board to divest billions from Chinese firms.

This week, April industrial profits and May purchasing managers’ index (PMI) readings will be released.

The USD/CNY currency pair rose 0.08% to 7.1363, from an opening of 7.1304, at 12:45 GMT on Monday. The EUR/CNY edged up 0.09% to 7.7746, from an opening of 7.7704.

If you have any questions, comments, or opinions regarding the Chinese Yuan, feel free to post them using the commentary form below.

Leave a Reply

required
required  

Navigation

Menu