Business News

CCTV Script 13/04/17


This is the script of CNBC's news report for China's CCTV on April 13, Thursday.

Welcome to CNBC Business Daily, I'm Qian Chen.

Confirming a reversal on tough China talk, President Donald Trump told The Wall Street Journal Wednesday that he will not label the Asian country a currency manipulator in a report due this week.

"They're not currency manipulators," Trump said in the interview.

Slapping the label on China had been one of Trump's key campaign promises.

Analysts told CNBC that Trump's backtracking on China Wednesday was a recognition of reality.

In the Treasury Department's most recent review in October, China met only one of three criteria set down by the United States before it can label the communist country a currency manipulator. The Treasury is expected to update the report this month.

Here are three criteria -

First of all, a "significant" bilateral trade surplus with the U.S. larger than $20 billion, meaning the country exports far more to the U.S. than it imports.

Secondly, a "material" current account surplus above 3 percent of gross domestic product, meaning national savings far exceed investments.

And thirdly, "Persistent, one-sided intervention" in the currency market, including repeated purchases of foreign currency (which drives up other currencies and drives down local currencies).

Among these three, China only met the first critieria.

China had a goods trade surplus far beyond that, of $347 billion in 2016, according to the U.S. Census Bureau.

However, China's current account surplus fell from 2.7 percent of GDP in 2015 to 1.9 percent of GDP in 2016, this number fails to meet the criteria. And we also see that China sold a record $188 billion in dollar-denominated U.S. Treasurys last year. China's own foreign exchange reserves have dropped $1 trillion in two-and-a-half years. That doesn't meet the third criteria. And take a listen of what former U.S. Secretary of the Treasuary Jacob Lew said earlier.

[Jacob Lew, Former U.S. Secretary of the Treasuary] "I think one of the key criteria is: Is the country intervening to try and gain unfair advantage in terms of the value of its currency, and I think objectively over the last year, China has been doing the opposite. To the extent that they've been intervening, they've been intervening at their own expense to protect their currency."

The president also said putting the label on China now could jeopardize U.S. talks with Beijing on the North Korean threat, according to the Journal.

Meanwhile, the U.S. dollar dropped suddenly after Trump said the currency was "getting too strong" in the interview.

The dollar index, which tracks the US currency against six major rivals, fell to its lowest since March 30 after the news.

[JAY JACOBS, Global X Director of Research] "It was certainly surprising to see the market react this way.You know, a reversal in policy decesion is hard to understand that how likely this is actually to play out in the future. If you try to play a policy decision, you need to come in with a certain level of confidence ... the new normal is gonna be a softer dollar."

CNBC's Qian Chen, reporting from Singapore.