Donald Trump says Russia, China playing 'currency devaluation game'

US President Donald Trump accused Russia and China on Monday of devaluing their currencies while the United States raises interest rates, prompting China to accuse the United States of sending confusing messages.

"Russia and China are playing the Currency Devaluation game as the US keeps raising interest rates. Not acceptable!" Trump said in a Twitter post.

Speaking in Beijing on Tuesday, Foreign Ministry spokeswoman Hua Chunying noted that what Trump said seemed to contradict the US Treasury's report that refrained from naming any major trading partners as currency manipulators.

"So it seems like the information being released by the US side is a bit chaotic," she told a daily news briefing.

Hua said it reminded her of a poem by the founder of modern China, Mao Zedong, about remaining calm in the midst of chaos.

"No matter what others say we will continue to steadily promote the reform of the renminbi exchange rate mechanism," she added, without elaborating, using the currency's formal name.

China's dollar bond maturities could haunt Fed policy meetings

In September 2015, the United States (US) Federal Reserve cited risks from China as a key reason for delaying its first interest rate hike in a decade. A wall of Chinese debt maturing in the next few years could jolt the country back into the US central bank's policy deliberations.

Two years ago, it was a collapse in Chinese stocks, a surprise yuan devaluation and shrinking foreign exchange reserves that roiled financial markets that delayed the Fed, but it did raise rates three months later and has tightened further since.

Now, some see risks emerging in China's dollar-denominated bonds that could give the Fed greater pause for thought as it raises rates, even as other central banks signal a shift from ultra-easy policy.

To be sure, Fed officials have not publicly flagged China's debt as a major risk in their policy discussions. However, debt analysts point to the possibility of another September 2015 moment in which the Fed takes its cues from concerns about China.

"Back then, I said that US monetary policy is not made in Washington, it's made in Beijing," said Joachim Fels, global economic advisor at bond giant PIMCO.

"China does have a major impact on monetary policies elsewhere ... This year has been smooth sailing for global central banks because there were no shockwaves from China but I expect that to change if we think beyond the next few months."
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