Dear readers

While it is still in mid-summer sizzling hot time， coupled with thundering rainfall in many areas in August， Autumn actually begins on a silent and firm foot， according to the 24 sola terms of Chinese traditional calendar based on the suns position in the zodiac.

As the Chinese proverb goes - “A rain of fall， a rain of chill”， meaning the weather is getting chillier with every coming rain in succession in the fall or Autumn. In addition to this natural phenomenon， a double whammy falls on the global economy， bringing a cold and turbulent air that will chill the prospect of economic growth. On August 5th， the Treasury Department of the United States designated China as a currency manipulator， a barrage of ammunition firing at China as it announced， just three days ago， 10% additional tariffs on $300 billion worth of Chinese goods imported into the United States ， which will go into effect on September 1，2019.

The trade altercation intensified into trade war between China and the United States， which has lasted over almost two years ever since President Trump signed the decision to impose tariffs on the imported iron and steel originated from all countries， including China at the beginning of 2018， staging a world-wide trade strife， with a series of actions， measures， cudgels coming in sequence， particularly set to strafe China by imposing additional tariffs on Chinese goods in dramatic episodes， intending to hit hard the Chinese economy. China is in good position to challenge all these attacks in a proper tit-for-tat magnitude to lash back， while insisting on its equally important position to sit-at-table negotiation to find creative solutions to the bilateral trade issues. It has well been noticed that the tariff has been the protagonist so far， but to our surprise， the currency manipulation that the United States has intently plotted to put into play will turn out to outshine the tariff role as a new warrior in this prolonged course of struggle against the world second largest economy in a new bout. How well the new combination blow will work on China and on the world economy is not yet known in precise estimation， but one thing is for sure that a currency manipulator is not a naming game， it is a very serious law-based procedure that requires further negotiation and action to take before it is enforced by imposing exorbitantly higher tariff rate as it is so-called “punitive tariff” on all the Chinese goods imported into the United States. If it comes true， the world economy is really feeling autumnal chill， and wintertime freeze as the economic landscape goes icy.

The fact is that nothing crops up to prove the accusation that China is undervaluing its currency for competitive advantage at the expenses of U.S. jobs and businesses. China has made it crystal clear that it has not engaged in any competitive devaluation of its currency， which has officially ended its dollar-pegged system in 2005 to adopt a managed flow regime， allowing its currency to be fully convertible for trade and financial purposes.

Let us take a glimpse of the textile industry， one of the very competitive manufacturing sectors in the country in spite of the fact that the costs for the factors of production are on the rise， to see how well it was going on for the first half of the year. The official figure shows the export of textiles and apparel dropped by 2 percent to arrive at$128.4 billion， a well-proven fact that it is a result of market mechanism. Should Chinese government manipulate the currency， this competitive sector would have had better operation on account of what was absurdly labeled as“currency manipulator” to gain better export competitive advantage. A hard backslap， oh？

ZHAO Hong Editor-in-Chief

August， 2019