Donald Trump accuses China of 'manipulating' its currency

Donald Trump has again accused China of manipulating its currency to combat US tariffs.

The accusation, made in an interview with Reuters, echoes claims the US President made during his 2016 campaign and repeated last month.

Mr Trump also criticised the head of the US Federal Reserve for raising interest rates, prompting the dollar to fall back.

The US and China will hold talks in Washington this week on trade.

Many doubt that the discussions, which involve lower-level officials, will be successful in defusing the tensions.

Mr Trump told Reuters he did not expect much from the meeting, which follows failed negotiations this spring.

He also said he had "no time-frame" in mind to bring the clash between the economic giants to a close.

Analysts have already voiced fears that the trade war between the US and China could become a currency war as well.

Trade war in progress

In July, the two countries imposed a first round of tit-for-tat tariffs affecting trade worth $34bn (£26.5bn).

The US plans to impose import duties on a further $16bn in Chinese trade on 23 August. China has promised to retaliate in kind.

The administration is also preparing additional tariffs on $200bn worth of Chinese goods, which are the subject of hearings in Washington this week.

This month, the administration announced that Mr Trump had asked his staff to consider taxes of 25%, instead of the 10% initially proposed.

At the time, officials disputed the notion that the higher tax was a response to the decline in the value of the yuan, but the president's comments to Reuters undermine that claim.

"I think China's manipulating their currency, absolutely," Mr Trump told Reuters.

What is currency manipulation?

• Mr Trump has not only accused China, but also the EU of currency manipulation.
• A country can intentionally undervalue its currency by selling its own currency to drive down its value, making its exports cheaper and more competitive.
• Currency manipulation is difficult to prove. Some analysts argue that China has acted to weaken its currency, largely by purchasing US government debt, in order to make its exports cheaper for American consumers.

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