US tightens controls on China imports of nuclear components

The yuan has fallen more than 9% against the dollar in the past six months

The yuan has fallen more than 9% against the dollar in the past six months

But Donald Trump has warned there is "a lot more to do" to hurt China as relations between the two economic rivals went into meltdown over a spy row.

"We expect the dynamic to change once we get a bit deeper into this, but for now China is trying to outrun the next round of tariffs", he said.

The Trump administration has pivoted to a more aggressive stance toward China since the president said last month the country is interfering in US elections.

Worries about the increased tariffs the two sides have imposed on each other's goods have contributed to this week's dizzying volatility in financial markets.

China's record high surplus with the USA could add to tensions in the trade relationship between the world's two largest economies.

A Xi-Trump meeting, if it happens, would take place during a summit of leaders of the Group of 20 biggest global economies in Argentina in late November.

Asia expert Michael Pillsbury on Friday said he's hopeful that President Trump and China's President Xi Jinping will reach a trade deal soon, but there's still some unfinished business. "I said it's over".

But as USA interest rates have risen, the U.S. dollar has strengthened further, which makes American exports more expensive.

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Commenting on this week's plunge in stock markets, Mnuchin called it a "natural correction", CNBC reported.

The Treasury Department is expected to issue next week its twice-a-year report on whether China or any other country is manipulating its currency to gain trade advantages.

Mnuchin met Thursday with Yi Gang, head of China's central bank.

Mnuchin would not say what the report would reveal, but in the past Treasury has placed China on a watch-list but said it did not meet the requirements to be labeled a currency manipulator. She pointed to the dollar's strength as the main culprit for the weaker Chinese currency.

Mnuchin said in the discussions he had with the Chinese they had made clear that they did not see a further weakening of the Chinese yuan as being in their interests. The review was prompted by China's accelerated efforts to acquire US intellectual property to the detriment of USA businesses and military interests, they said.

China's trade surplus with the USA jumped to a monthly record high of US$34.1 billion last month on the back of an escalating trade war that shows little sign of cooling, according to data released by China's customs administration on Friday.

The yuan has lost almost 10 percent of its value against the U.S. dollar this year.

"It's obvious that the immediate effects of the trade war are the exact opposite of what the Trump administration had been planning", said Andrew Polk of Trivium China, a Beijing-based economics research firm.

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