Chinese policymakers are prepared for an increasingly possible scenario in which the US government changes its previously established criteria on currency manipulation to specifically target China, a move that would add serious fire to the ongoing trade war, analysts said on Monday.

After stopping short of labeling China a currency manipulator in its latest report, the US Treasury Department is reportedly open to making changes to the criteria to justify future decisions to name China a currency manipulator – a political promise made by US President Donald Trump well before he took office.

“We always look at these things,” US Treasury Secretary Steven Mnuchin said regarding potential changes to the current criteria in an interview with Bloomberg. “We may at some point look at whether the tests should be changed,” he was quoted as saying by Bloomberg on Sunday.

But Chinese analysts on Monday dismissed Mnuchin’s comments as just another pressure tactic the US is looking at during the ongoing trade war between the world’s two largest economies.

“[Mnuchin] made the comments about his open attitude toward changing the criteria to just keep the pressure on China, but there is nothing new here that we haven’t seen,” Mei Xinyu, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Monday.

Mei noted that the US has been constantly threatening to name China a currency manipulator, even before Trump came into power, and China is well prepared for such a scenario.

“We have heard so much about this threat. But even if they did label China a currency manipulator, there is nothing new that we are not prepared for,” Mei added.

“The US understands that this is like a nuclear weapon. It has the most powerful deterrence at the launch pad. After it’s fired, it’s a disaster for both sides.”

Despite Trump’s repeated threats to label China a currency manipulator, the US Treasury Department has refused to make such a decision – including in its latest semiannual report released last week – because China did not meet the three criteria.

The criteria include a minimum $20 billion trade surplus with the US, a current account surplus that exceeds 3 percent of the country’s GDP and repeated intervention in currency markets. Analysts have said that China only meets the first criterion.

Political report

But last week’s report singled out China for harsh criticism over its lack of transparency in monetary policy. And Mnuchin’s comments on Sunday made it clear that labeling China a currency manipulator has become a political task for the US Treasury Department, said Chen Fengying, a research fellow at the China Institutes of Contemporary International Relations in Beijing.

“If the US goes ahead to change its own criteria just so it can label China a currency manipulator, then it becomes very clear that it just wants to target China,” Chen told the Global Times.

Such a decision would seriously damage the US report’s credibility and would carry no weight “other than justifying the US government’s actions to blackmail China into making trade concessions,” she said. “It becomes a political tool and no longer an accurate economic report.”

In his interview, Mnuchin noted that the report “is not meant to be a political report,” but a report to inform congress on “information” about currency practices of major trading partners of the US. But Mnuchin is facing pressure from Trump, who has long called for labeling China a currency manipulator, without citing any evidence.

While naming China a currency manipulator in itself does not automatically carry consequences, it could become justification for the US government to take further punitive actions against China, experts said.