T HE NEW YORK TIMES INTERNATIONAL EDITION THURSDAY, AUGUST 29, 2019 | 7

Business

China’s currency weakened by 0.15 per-
cent against the United States dollar on
Tuesday. It was a decline that — on its
own — seems unremarkable.
But as the trade war between Wash-
ington and Beijing drags on, the value of
the renminbi is increasingly at the heart
of the global fight over trade, technology
and economic dominance between the
world’s two largest economies.
Lately, even the minuscule moves are
starting to add up.
Tuesday’s dip pushed the currency to
its weakest level against the dollar since
early 2008, according to data from Fact-
Set. Since the Trump administration be-
gan to talk of imposing tariffs on Chi-
nese exports in early 2018, the currency
is down roughly 10 percent. The drop
has picked up speed in August, with the
renminbi down about 4 percent.
Allowing the currency to weaken
helps China offset the impact of Ameri-
can tariffs on its products. When the ren-
minbi crossed 7 per dollar this month —
a symbolic level that the Chinese au-
thorities had long kept it from crossing
— the move was seen as a deliberate ef-
fort by Beijing to blunt the Trump ad-

ministration’s stated goal of cutting the

United States’ trade deficit with China.

But the drop also reflects uncertainty

about what China’s economy faces, as

the global trading system it depends on

is thrown into chaos by the trade war.

And there’s evidence that Beijing has

been trying to prop the currency up,

rather than weaken it drastically.

“The trading relationship of China

and the rest of the world is changing,”

said Ben Emons, managing director of

global macro strategy for Medley Global

Advisors. “There’s less demand for Chi-

nese goods and less demand for the Chi-

nese currency.”

By definition, any analysis of the

movements of China’s currency is partly

a guessing game. Chinese policymakers

with authority over the renminbi aren’t

particularly transparent about their in-

tentions.

But it is also becoming clear that de-

spite China’s financial firepower and

technical expertise in managing its

economy, the trade war is fundamen-

tally changing the economic system of

globalization that enabled the country’s

rise.

LARGE-SCALE FACTORS AT PLAY

China does set a daily “fixing” around

which the currency can trade, but the

falling value also reflects the range of

large-scale economic factors that would

affect any exchange rate: economic

growth, interest rates and trade bal-

ances. In China, many of those economic

vital signs have been weakening lately,

most likely as a result of the spiraling

fight over tariffs.

Growth is clearly slowing, and inter-

est rates are widely expected to fall as

the government tries to keep the coun-

try’s expansion alive.

And then there are the tariffs them-

selves. Economic theory has long pre-

dicted that tariffs will result in a weak-

ening currency, for relatively straight-

forward reasons: They’re designed to

cut the exports of the country on which

they’re levied, in this case China’s ex-

ports to the United States.

If they work, and there is some evi-

dence that American manufacturers are

shifting their orders to Vietnam and

other countries, it means less demand

for Chinese products, and therefore less

demand for the country’s currency.

A VICIOUS CYCLE

The dour outlook for the economy may

also be prompting some global investors

to pull money out of China.

More than $60 billion fled China in

May and June, the last months for which

data was available from the Institute of

International Finance, a banking group

that tracks money flows to emerging

markets.

A weakening renminbi itself can also

spur capital outflows from wealthy Chi-

nese seeking to protect their savings

from devaluation.

Such outflows can be difficult to con-

trol, forming a feedback loop in which

downward pressure on a currency

causes more selling, as investors rush to

cash out of Chinese investments.

When they do this, they convert their

renminbi in financial markets, effec-

tively selling the Chinese currency —

which weakens it — and buying dollars,

yen or euros.

CHINA’S STOCKPILE OF DOLLARS

Another clue that the falling currency

isn’t entirely Beijing’s doing is that its

stockpile of dollars hasn’t been growing

very much.

Because China sets a narrow price

range for the currency, it has to inter-

vene in markets to keep it within that

band. If the renminbi gets too weak, the

central bank will use some of its dollars

to buy the currency.

Conversely, when the Chinese au-

thorities are trying to keep the country’s

currency cheap, they print it and use it

to buy up dollars. The result for the Chi-

nese is both a weaker currency and a

large stockpile of American dollars.

And for decades, as the Chinese were

keeping their money artificially cheap

to give their exporters an advantage,

the country’s stockpile of dollars surged.

But in recent years, something

changed. With China’s growth now slow-

ing, the currency has been weakening.

At the same time, China’s stockpile of

dollars has declined, meaning that

China is effectively selling dollars and

buying renminbi in an effort to keep the

currency stronger.

That means that, as far as we know,

China hasn’t been trying to weaken its

currency by intervening in the markets.

It’s worth noting that public data on the

central bank’s dollar holdings is avail-

able only through June, so this view may

well change when more information be-

comes available.

The sharp drops in the renminbi this

month, however, also suggest that China

isn’t going to spend too much of its

money trying to fight the market forces

trying to drive its currency down in val-

ue.

So, all over Wall Street, analysts ex-

pect China’s currency weakness to con-

tinue, alongside the trade battle.

Government has tried

to prop renminbi up

against global unease

BY MATT PHILLIPS

Decline in Chinese currency isn’t all Beijing’s doing

Tuesday’s dip in the renminbi pushed the currency to its weakest level against the

United States dollar since early 2008, according to data from FactSet.

JEENAH MOON FOR THE NEW YORK TIMES

Peppered with complaints from farmers
fed up with President Trump’s trade
war, Sonny Perdue found his patience
wearing thin. Mr. Perdue, the agricul-
ture secretary and the guest of honor at
the annual Farmfest gathering in south-
ern Minnesota this month, tried to break
the ice with a joke.
“What do you call two farmers in a
basement?” Mr. Perdue asked near the
end of a testy hourlong town-hall-style
event. “A whine cellar.”
A cascade of boos ricocheted around
the room.
American farmers have become col-
lateral damage in a trade war that Mr.
Trump began to help manufacturers and
other companies that he believes have
been hurt by China’s “unfair” trade
practices.
More than a year into the trade dis-
pute, sales of American soybeans, pork,
wheat and other agricultural products
to China have dried up as Beijing has re-
taliated against Mr. Trump’s tariffs on
Chinese imports. Lucrative contracts
that farmers long relied on for a signifi-
cant source of income have evaporated,
as Chinese buyers have looked to other
nations like Brazil and Canada to get the
commodities they need. Farm bank-
ruptcy filings in the year through June
were up 13 percent from 2018, and loan
delinquency rates are on the rise, ac-
cording to the American Farm Bureau.
The predicament of farmers is becom-
ing a political problem for Mr. Trump as
he heads into an election year. For
months, farmers have remained reso-
lute, continuing to pledge support to a
president who says his trade policies
will help the agricultural industry win in
the end. While there are few signs of an
imminent blue wave in farm country, a
growing number of farmers say they are
losing patience with the president’s ap-
proach and are suggesting it will not
take much to lose their vote as well.
Mr. Trump, who regularly brags about
an economic boom despite signs of a
slowdown, has in some cases made mat-
ters worse. He recently dismissed sales
of American wheat, suggesting Japan
was buying it only as a favor to the
United States. And his frequent tweets
insisting that “farmers are starting to do
great again” have rubbed some agricul-
ture groups the wrong way.
“We’re not starting to do great again,”
Brian Thalmann, the president of the
Minnesota Corn Growers Association,
told Mr. Perdue at the event. “Things are
going downhill and downhill quickly.”
On Monday, after a 72-hour period
during which Mr. Trump twice escalated
his trade war with China, Mr. Thalmann
said he could no longer support the pres-
ident as he did in 2016.
“At some point we have to quit playing
games and get back to the table and fig-
ure this out,” Mr. Thalmann said.
“There’s no certainty to any of this.”
Losing the world’s most populous
country as an export market has been a
major blow to the agriculture industry.
Total American agricultural exports to
China were $24 billion in 2014 and fell to
$9.1 billion last year, according to the
American Farm Bureau. Exports of
farm products to China fell by $1.3 bil-
lion in the first half of the year, the agri-
culture group said this month.
A report from the Agriculture Depart-
ment this month found that Canadian

wheat exports to China have “rocketed”

this year, while exports from the United

States have plunged.

The administration has tried to mol-

lify farmers by rolling out two financial

aid packages totaling $28 billion. The

White House has also dispatched Mr.

Perdue, the 72-year-old former gover-

nor of Georgia who was raised on a farm

and trained as a veterinarian, to places

like Minnesota, Iowa and Wisconsin to

calm the nerves of farmers.

But as the trade fight gets uglier,

farmers are beginning to panic. Last

week, Mr. Trump said he would increase

tariffs on $250 billion worth of Chinese

imports to 30 percent and impose a 15

percent tax on another $300 billion

worth later this year. China has already

said it will no longer buy American agri-

cultural products and announced on Fri-

day that it would raise tariffs on $75 bil-

lion of exports from America.

That prompted Mr. Trump to describe

Xi Jinping, China’s president, as an “en-

emy” and suggest that he wanted to

raise tariffs even higher, before declar-

ing on Monday that talks between the

two nations continue.

The trade conflict’s toll on farmers is

spreading to the manufacturers that

serve them. Deere & Company, the

maker of agricultural equipment, said

this month that it was cutting its profit

forecast for the second time this year.

The company’s chief executive said

farmers were delaying purchases be-

cause of concerns about access to ex-

port markets.

The administration is looking for

other ways to help farmers, including

scrambling to secure additional trade

deals. At the G7 summit in France this

week, Mr. Trump said the United States

and Japan were nearing an agreement

that would result in Japanese compa-

nies buying more American corn.

Mr. Trump is also trying to appease

corn farmers who complain that an En-

vironmental Protection Agency deci-

sion this month will hamper ethanol pro-

duction. Farmers say the agency’s deci-

sion to exempt small oil refineries from

a requirement to blend corn-based

ethanol into gasoline has led to a drop in

demand for the fuel.

Last Thursday, Mr. Trump summoned

Mr. Perdue and Andrew Wheeler, who

heads the E.P.A., to the White House to

discuss options for increasing ethanol

demand. The three came up with a pack-

age of policies that Mr. Trump plans to

unveil at a White House ceremony in the

next week, according to people familiar

with the plan. The package would leave

the waivers for ethanol refineries in

place, while slightly increasing federal

mandates for production of corn-based

ethanol and biodiesel and allowing vehi-

cles that use high-ethanol blends of gas-

oline to qualify for special E.P.A. credits.

Mr. Perdue is a somewhat unlikely

lieutenant in Mr. Trump’s trade war. As

Georgia’s governor, he worked to

strengthen ties between the state and

China, welcoming Chinese companies

and making economic development

trips to Shanghai and Beijing. At one

point he pushed for Atlanta to become a

hub for the Free Trade Area of the Amer-

icas, a proposed 34-country trade pact

that never came to fruition.

“He’s a very strong supporter of free

trade,” said Craig Lesser, who worked

for Mr. Perdue as Georgia’s commis-

sioner of economic development.

But in the Trump administration, Mr.

Perdue has been a staunch backer of the

president’s policies, publicly defending

tariffs, working to shrink the federal

government and expressing doubts

about the science behind climate

change.

“He’s the Trump whisperer,” said Neill

Herring, an environmental activist in

Georgia who once worked with Mr. Per-

due in the State Legislature. “He can tell

Trump exactly what he wants to hear.”

Mr. Perdue declined to be inter-

viewed. His spokeswoman pointed to

the extent of his outreach to farmers,

noting that as of late July he had visited

all 50 states, had traveled more than

113,600 miles and had gone to 104 farms

since taking the job in 2017.

Mr. Perdue, who was once a Demo-

crat, has also shown a penchant for

pleasing conservatives. Last year, he

pitched the idea of slashing federal food

stamp assistance programs by partially

replacing food allowance money for the

poor with “harvest boxes” of pasta, ce-

real and canned goods selected by the

government. That plan was eventually

scrapped, but Mr. Perdue has continued

his push to curtail food stamps this year,

including last month when he proposed

a rule that would cut three million peo-

ple off from food stamps by changing the

eligibility requirements.

Most recently, Mr. Perdue won plau-

dits from top White House officials for

moving part of his agency out of Wash-

ington. After agency research clashed

with the administration’s policy agenda,

Mr. Perdue decided last year to relocate

two of the department’s scientific divi-

sions — the Economic Research Service

and the National Institute of Food and

Agriculture — to the Kansas City region.

Mr. Perdue claimed that the relocation

was not retaliatory and was about mov-

ing researchers closer to their subjects.

According to the American Federa-

tion of Government Employees, only

about 100 of the approximately 500 em-

ployees from the divisions have agreed

to relocate.

When Mr. Perdue addressed employ-

ees in June about the move, several

stood and turned their backs to him, ac-

cording to people who were in the room.

Democrats have been outraged by the

relocation, calling it an attack on sci-

ence. And the Agriculture Department’s

inspector general said in a report re-

leased this month that moving the re-

search units without congressional ap-

proval might be illegal.

In the West Wing, however, Mr. Per-

due’s decision was seen as a stroke of

brilliance.

At the South Carolina Republican Par-

ty’s Silver Elephant gala in early Au-

gust, Mick Mulvaney, the acting White

House chief of staff, hailed Mr. Perdue’s

maneuver as a case study of how to

“drain the swamp.”

“It’s nearly impossible to fire a federal

worker,” Mr. Mulvaney said. “I know

that because a lot of them work for me

and I’ve tried and you can’t do it.”

At Minnesota’s Farmfest, it was clear

that Mr. Perdue’s Southern charm could

go only so far. His answers to questions

about how the trade war with China

would end were curt, and his quip about

whining farmers left some with a sour

taste.

“We shouldn’t have to whine to get

paid,” said Joel Schreurs, a farmer from

Tyler, Minn., who questioned Mr. Perdue

at the event. “They should be grateful

that we’re taking one for the team.”

Last week, Agriculture Department

staff members in Nebraska left the Pro

Farmer Midwest Crop Tour after receiv-

ing a threat from an angry farmer. Ac-

cording to an organizer of the event,

farmers have been venting to the gov-

ernment employees who attended the

annual tour about depressed crop

prices, falling farm income and diffi-

culty gaining access to credit.

“This is a stressful time in agricul-

ture,” said Joel Jaeger, the general man-

ager of Pro Farmer. “There’s certainly a

lot of stress in the farm community.”

But many farmers continue to sup-

port Mr. Trump and express hope that

the president knows what he is doing in

his dealings with China.

A July survey from Farm Journal

found that 79 percent of 1,100 farmers

still back Mr. Trump despite the lack of

progress in negotiations with China.

However, his support dropped to 71 per-

cent in August.

For now, Mr. Perdue largely remains

an effective emissary, with the industry

still hoping Mr. Trump can pull off the

kind of trade deal he has been promis-

ing.

“He’s one of us; he’s a farmer,” Brad

Kremer, a Wisconsin farmer who is the

treasurer of the American Soybean As-

sociation, said of Mr. Perdue. “I think

he’s got a tough job in a tough adminis-

tration.”

WASHINGTON

Agriculture secretary works

to head off revolt from

heart of president’s base

BY ALAN RAPPEPORT

Sales of American agricultural products to China have dried up as Beijing retaliates against President Trump’s tariffs and Chinese buyers look elsewhere.

MELISSA GOLDEN FOR THE NEW YORK TIMES

Farmers’ frustration over trade war grows

Coral Davenport contributed reporting.

The White House has dispatched the agriculture secretary, Sonny Perdue, to places like

Minnesota, Iowa and Wisconsin to calm the nerves of worried farmers.

MIKE BLAKE/REUTERS

Farm bankruptcy filings in the

year through June were up 13

percent from 2018, and loan

delinquency rates are on the rise.

RELEASED BY "What's News" vk.com/wsnws TELEGRAM: t.me/whatsnws

RELEASED

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RELEASED

has picked up speed in August, with the
renminbi down about 4 percent.

RELEASED

renminbi down about 4 percent.
Allowing the currency to weaken

RELEASED

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helps China offset the impact of Ameri-

RELEASED

helps China offset the impact of Ameri-
can tariffs on its products. When the ren-
RELEASED

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minbi crossed 7 per dollar this month —minbi crossed 7 per dollar this month —RELEASED

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minbi crossed 7 per dollar this month —

TELEGRAM:

minbi crossed 7 per dollar this month —
a symbolic level that the Chinese au-

TELEGRAM:

a symbolic level that the Chinese au-
thorities had long kept it from crossing

TELEGRAM:

thorities had long kept it from crossing
— the move was seen as a deliberate ef-

TELEGRAM:

— the move was seen as a deliberate ef-
fort by Beijing to blunt the Trump ad-
TELEGRAM:

fort by Beijing to blunt the Trump ad-

t.me/whatsnws

nese exports in early 2018, the currency

t.me/whatsnws

nese exports in early 2018, the currency
is down roughly 10 percent. The drop

t.me/whatsnws

is down roughly 10 percent. The drop
has picked up speed in August, with the

t.me/whatsnws

has picked up speed in August, with the
renminbi down about 4 percent.

t.me/whatsnws

renminbi down about 4 percent.
Allowing the currency to weaken

t.me/whatsnws

Allowing the currency to weaken
helps China offset the impact of Ameri-

t.me/whatsnws

helps China offset the impact of Ameri-
can tariffs on its products. When the ren-
t.me/whatsnws

can tariffs on its products. When the ren-
minbi crossed 7 per dollar this month —minbi crossed 7 per dollar this month —t.me/whatsnws