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China's top central banker on Saturday pledged to keep the yuan currency's value "broadly stable," a sign that Beijing may be trying to prevent a bruising trade dispute with the United States from spilling over into a currency war.
People's Bank of China Governor Yi Gang's statement at the International Monetary Fund and World Bank annual meetings in Bali came as U.S. Treasury Secretary Steven Mnuchin said Chinese officials had told him that further yuan depreciation was not in China's interest.
Mnuchin has reiterated his concerns that a major drop in the yuan's value this year against the dollar could be part of an effort to gain a trade advantage for Chinese exports or to offset the impact of U.S. tariffs.
The yuan has fallen more than 8 percent against the dollar since the end of April to about 6.91 on Friday, close to the psychologically important 7.0 level not seen in a decade.
"China will continue to let the market play a decisive role in the formation of the RMB exchange rate," Yi said in an International Monetary and Financial Committee (IMFC) statement posted on Saturday. "We will not engage in competitive devaluation, and will not use the exchange rate as a tool to deal with trade frictions."
His statement echoes currency pledges made in a communique issued by the IMF's member countries on Saturday to step up their trade dialogue as rising tariff frictions, and higher borrowing costs threaten to knock global growth.
In the statement from the IMF's steering committee, the member countries also agreed to debate ways to improve the World Trade Organization so it can better address trade disputes.
"We acknowledge that free, fair, and mutually beneficial goods and services trade and investment are key engines for growth and job creation," the IMFC said in the statement.
"We will refrain from competitive devaluations and will not target our exchange rates for competitive purposes," it added.
International Monetary Fund Managing Director Christine Lagarde said on Thursday that she believes Chinese authorities are trying to maintain growth and stability in the face of a trade conflict with the United States, but added that this is a "complicated" balancing act."The Chinese authorities are certainly looking at options, I would think, in order to maintain a level of growth that would keep the economy under control, and we are seeing recent decisions from the PBOC to that effect," Lagarde said during a discussion at the IMF and World Bank annual meetings in Bali."I think that it's a complicated equation, where they have to both use the flexibility that is available, but at the same time be very attentive to their fiscal position," she added.
IMF chief says China faces balancing act as it seeks to maintain growth
China is waging an unprecedented campaign to influence American public opinion as November congressional elections approach, U.S. Homeland Security Secretary Kirstjen M. Nielsen said on Wednesday."China absolutely is on an unprecedented - or exerting unprecedented effort to influence American opinion," Nielsen told a Senate panel. "We have not seen to date any Chinese attempts to compromise election infrastructure." US Supreme Court takes up immigration detention dispute
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Rate Hike Worries
On Thursday, IMF Managing Director Christine Lagarde warned countries against engaging in currency and trade wars, which would hurt global growth as well as "innocent bystander" nations, including emerging markets that supply commodities
Some of these countries, including Indonesia, the host of the IMF and World Bank meetings, are already struggling to contain capital outflows prompted by higher U.S. interests rates.
Fears that rates could spike sharply higher - and the international trade tensions - touched off a searing sell-off in global stock markets over the past week.
European Central Bank Governor Mario Draghi warned on Saturday that a "snap back" in rates and a sharp repricing of asset prices were the biggest risks to the economic outlook.
Blaming the Sino-U.S. trade dispute, the IMF this week cut global growth forecasts for 2018 and 2019.
"The recovery is increasingly uneven, and some previously identified risks have partially materialised," the IMFC communique said, referring to threatened tariffs and outflow pressures.
The United States and China have slapped tit-for-tat tariffs on hundreds of billions of dollars of each other's goods over the past few months, sparked by U.S. President Donald Trump's demands for sweeping changes to China's intellectual property, industrial subsidy and trade policies.
Trump has frequently accused China of cheapening its currency to gain a trade advantage, claims Beijing has consistently rejected. The U.S. Treasury is due to release a key report on currency manipulation next week.
Despite reassurances from China's central bank on currency policy, some analysts say yuan weakness will persist, as there is no clear path towards resolving the U.S.-China trade dispute and higher tariff rates loom in January.
"Clients in China remain unwilling to call a bottom in the yuan," NatWest Markets head of foreign exchange strategy Mansoor Mohi-uddin said in a research note. "This in turn makes us cautious about calling for a peak in the dollar globally."
Further Federal Reserve rate hikes are expected to underpin the dollar's strength and increase capital outflow pressures on emerging market economies
But Bank of Japan Governor Haruhiko Kuroda said the Fed's rate hikes were "basically good" for the world economy, though he was more cautious about escalating trade tensions due to their "rather unusual" scale.
China said on Friday that it resolutely opposed Malaysia's decision to release 11 ethnic Uighur Muslims from detention and send them to Turkey, disregarding China's request to hand them to Beijing.China was in the process of verifying details with Malaysia and hoped that the Southeast Asian nation would "attach great importance" to its concerns, China's Foreign Ministry said in a faxed statement to Reuters."These people are all Chinese nationals. We resolutely oppose them being deported to a third country," it said.Prosecutors in Muslim-majority Malaysia dropped charges against the Uighurs on humanitarian grounds and they arrived in Turkey after flying out of Kuala Lumpur on Tuesday, their lawyer, Fahmi Moin, said on Thursday.China changes river’s name for sounding too ‘Islamic’The Malaysian government has yet to comment on the matter.The Uighurs in Malaysia were part of a group of more than 200 detained in Thailand in 2014.Although they identified themselves as Turkish citizens and asked to be sent to Turkey, more than 100 were forcibly returned to China in July 2015, sparking international condemnation.The Uighurs were detained and charged with illegally entering Malaysia after breaking out of the Thai prison last November by punching holes in a prison wall and using blankets as ladders.China mounts publicity campaign to counter criticism on XinjiangMalaysia's move is likely to strain ties with China, already tested since Mahathir Mohamad became prime minister after a stunning election victory in May and cancelled more than $20 billion worth of projects awarded to Chinese companies.In February, Reuters reported that Malaysia was under great pressure from China to deport the men there, citing sources. Some Western missions sought to dissuade it from sending them to China, which has been accused of persecuting Uighurs.Beijing accuses separatist extremists among the Uighur minority of plotting attacks on China's Han majority in the restive far western region of Xinjiang and elsewhere.China has been accused of rights abuses in Xinjiang, torture of Uighur detainees and tight controls on their religion and culture. It denies wrongdoing.In February, Malaysia said it was considering China's request to extradite the 11 men. In the past, it has sent some detained Uighurs to China.Their detention came as Malaysia drew closer to China under former prime minister Najib Razak, but 93-year-old Mahathir, in his second stint as premier, has been vocal in backing Muslim communities against persecution.In its statement on Friday, China's Foreign Ministry said it was against illegal immigration in any form. 
China opposes Malaysia's release of 11 Uighur Muslims
While U.S. President Donald Trump appears to wage a trade "Cold War" on China, Japanese Prime Minister Shinzo Abe will promote a thaw with Beijing at a summit this month where business ties will be in the spotlight.A tough line on China helped Abe to regain office in 2012 during a row over tiny East China Sea isles that put ties in a deep chill. Now, Abe hopes to build on a rapprochement welcomed by Beijing, which is locked in an escalating trade war with Washington.Japan shares U.S. concerns about Beijing's maritime assertiveness and is extending its military reach to counter China. Japanese firms worry also about Chinese violations of intellectual property rights and technology theft.Still, business ties with China, the world's second largest economy, are vital for Japan.G20 fails to mend trade rift, chair urges protagonists to resolve disputes"To ensure that Japan has sustainable economic growth, you cannot ignore economic relations with China," said a Japanese foreign ministry official, who spoke on condition of anonymity.Abe has met Chinese President Xi Jinping many times since their first chilly conversation in 2014 on the sidelines of an Asia leaders' summit in Beijing.Abe's Oct. 26 meeting with Xi, officially confirmed on Friday, will be the first full-scale Sino-Japanese summit since 2011. Both sides hope more mutual visits will follow.The thaw has been linked to a shift in Beijing's diplomacy since late 2017 and increasing U.S.-China friction over trade.Winter is coming: Indonesia warns of new crisis from trade warSHIFTING WINDSJapanese firms want to see ties normalised so they can compete with U.S. and European rivals.An executive at automaker Toyota, speaking on condition of anonymity, said the mood had changed from the "China risk" theme of the past few years. "The sentiment...is shifting very fast, leading to more for us to do in China," he said.China is Japan's biggest trading partner. Japan is China's second largest trading partner, after the United States, and fourth biggest investor.Japan's direct investment in China rose in 2017 for the first time in five years, a trend that continued in the first eight months of 2018, the Japan External Trade Organization said in a report that also flagged growing Japanese exports to China.A highlight of Abe's visit is expected to be a forum attended by up to 1,000 executives and trade officials to discuss China-Japan economic cooperation in third countries.China expects Abe to make a relatively supportive statement on its Belt and Road initiative, a vehicle to fund and build global transport and trade links in more than 60 countries."We really hope that Japan on this issue is not in vicious competition with China," said Wang Yiwei of Renmin University in Beijing. "It could be positive competition or even cooperation."Belt and Road has come under fire for saddling poor nations with unsustainable debt through big projects that are not economically viable. Beijing rejects the criticism.Japanese participation could help Belt and Road's image and allay the fears of debtor nations, experts and officials said.Abe may, however, shun the Belt and Road label.Japanese defence officials are wary of its military implications, and Tokyo is pushing its Free and Open Pacific Strategy to promote free trade and infrastructure across Asia, Africa and the Middle East.Japan wants to ensure joint projects with China are transparent, open, economically viable and fiscally sound for debtor countries, officials said."This is not 'support' for Belt and Road. We will not ease global standards," a Japanese trade official said.Several non-binding agreements, known as MOUs, are expected from the forum, including one on a project in Thailand, a Japanese source involved in the forum planning said.Such agreements "would be a symbol of improving ties," said Koji Sako, a senior economist at Mizuho Research Institute."POISON PILL"Japan is involved in efforts to forge a Regional Comprehensive Economic Partnership among 16 nations including China, as well as in talks on a China-Japan-South Korea free trade pact. Tokyo would thus balk at the sort of "poison pill" found in a new U.S.-Canada-Mexico free trade pact, Japanese officials said.The provision effectively gives Washington veto power over any free trade deal with China. U.S. Commerce Secretary Wilbur Ross has said they might seek a similar clause with other countries.Abe and Trump have agreed to start talks on a new Japan-U.S. trade deal that Washington hopes will cut its trade deficit, while Tokyo aims to avert higher tariffs on its auto exports."I can't imagine a situation in which we'd accept such a course," said another Japanese government source when asked about the poison pill provision.The U.S. State Department and White House declined to comment when asked about the coming Abe-Xi summit.A U.S. push to get Japan to join efforts to isolate China would present Tokyo with a dilemma, although officials said Abe could tell Trump that Japan was taking a different approach with the same goal - convincing China to play by global rules.Such U.S. pressure could find support inside Japan.Many conservative politicians are deeply wary of China, as are many Japanese voters. A survey published on Thursday showed 86 percent of Japanese had a "bad image" of China."There are some in Japan who think the security relationship with the United States takes precedence over Japan's economic issues," said Kiyoyuki Seguchi, research director at the Canon Institute for Global Studies."But if one...asks whether economic development is possible without cooperative development with China, the answer is 'No'." 
Japan's Abe pursues China thaw as US-Beijing ties in deep freeze
U.S. stock index futures were slightly lower on Wednesday on lingering concerns around slowing global growth, while investors awaited producer price data for a reading on inflation.The U.S. Labor Department is expected to report that its producer price index (PPI) for final demand rose 0.2 percent in September, after an unexpected drop in August. The report is due at 8:30 a.m. ET (1230 GMT).A recent string of healthy economic data, including strong jobs and services sector activity last week, has fanned fears of rising inflation and faster interest rate hike.That has pushed up U.S. Treasury yields to seven-and-a-half-year highs, which has weighed on the stock market.Alongside those concerns, investors also have to consider the impact of the U.S.-China trade war on the global economy. The International Monetary Fund on Tuesday cut its global growth forecast for 2018 and 2019, saying the United States and China would face the brunt of the impact of their dispute next year."The tone of caution is on the rise and is being amplified as the trade war with China is showing no signs of reversing," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.Shares of Alibaba dropped 0.6 percent in premarket trading after Morgan Stanley and Raymond James cut their near-term profit estimates on the Chinese e-commerce company, citing a softer economic environment in China.Apple and Amazon.com were flat. The top Republican on the Senate Commerce Committee has asked the two companies and Super Micro Computer for staff briefings about a Bloomberg report that the Chinese government implanted malicious hardware into server motherboards provided by Super Micro.At 7:50 a.m. ET, Dow e-minis were down 20 points, or 0.08 percent. S&P 500 e-minis were down 3.5 points, or 0.12 percent and Nasdaq 100 e-minis were down 22.25 points, or 0.3 percent.Sears Holdings plunged 31.6 percent after the Wall Street Journal said the debt-laden retailer was preparing for a possible bankruptcy.PPG Industries rose 3.3 percent after Nelson Peltz's Trian Fund disclosed a stake in the chemicals maker, which tumbled 10 percent on Tuesday after cutting its current-quarter forecast.Nio jumped 9.9 percent after Tesla's second-biggest shareholder, Baillie Gifford & Co, disclosed a stake in the Chinese electric carmaker. Tesla was up 1 percent. 
US STOCKS-Futures dip ahead of producer price data