China Lets Yuan Sink, Trump Says Serious Talks To Start

China allowed its yuan to sink and U.S. President Donald Trump said the two sides will talk “very seriously” about their war over trade and technology following tit-for-tat tariff hikes and Trump’s threat to order American companies to stop doing business with China.

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The escalations prompted warnings that the chances of a settlement of the fight that threatens to tip the global economy into recession were disappearing. But Trump, speaking at the Group of Seven meetings of major economies in France, said serious negotiations would begin.

“We are going to start talking very seriously,” Trump said. He said the Chinese “mean business.” Trump gave no details. Negotiators already were scheduled to meet next month in Washington following talks in Shanghai in July that ended with no signs of progress.

The Chinese central bank allowed the yuan to decline to 7.1468 to the dollar in tightly controlled trading. It was a relatively modest change from Friday’s low point of 7.0927 but its weakest rate since January 2008. The yuan has lost 6.5% from this year’s high on Feb. 28. Chinese leaders have promised to avoid “competitive devaluation” to help exporters in the face of Trump’s tariff hikes. But regulators are trying to make the state-set exchange rate more market-oriented. That allows investor jitters about the tariff war and its impact on Chinese economic growth to push the yuan lower.

Last week, Trump announced more tariff increases and said he was ordering American companies to stop dealing with China. He said later he was threatening to use emergency powers under a 1977 law that targets rogue regimes, terrorists and drug traffickers.