This paper probes into the impacts of US‐China trade rows on China's exports of products covered under the applicable tariff lines. We scrutinise the monthly trade data of China with the US and third‐party markets from January 2017 to June 2019, employing the DID model. It is found firstly that the US levy of tariffs on $50 billion and $200 billion worth of Chinese products have produced a significant and adverse trade destruction effect on China's exports to the US. Meanwhile, the tariffs levied on these products have played a significant and positive role in deflecting China's export to third‐party markets. Second the US additional tariffs on $50 billion of China's products have produced greater trade destruction and deflection effects on China's export of tariff‐targeted products to the US, whereas only the US additional tariffs on $200 billion of China's products have caused a net trade destruction effect. Third, it is confirmed that the trade destruction effects of US additional tariffs on Chinese products exported to the US are mainly concentrated on high tech‐intensive manufactures and primary goods, while the trade deflection effect of China's export to third‐party markets is concentrated on differentiated products. The findings render crucial policy implications.

This paper reveals the inherent characteristics behind the statistical phenomena of exchange rate interactions and co‐movements, corroborated empirically by exploring a range of currencies with varied degrees of flexibility. It then studies purposely the historical evolution and development prospects of the RMB exchange rate regime. The RMB exchange rate behaviour and statistical patterns are contrasted with the freely floating currencies in this context. Taking up alternative policy positions, the expected developments in RMB characteristics are deliberated, projecting a trajectory for further RMB regime reforms. How the RMB would fulfil the significant role on the global currency market as signified by its position in the SDR basket is contemplated, beyond a conventional policy shift and under the paradigm that the global currency market tends to be tri‐polar.

We are delighted to see Dr Alan King's interest and curiosity in the subject of PPP and, in particular, this paper of ours. This is a Rejoinder to his Comment.