China could soon be called out as a currency manipulator. Here's why

The current war on trade continues to rage. On Wednesday, Beijing announced it would counter the most recent round of U.S. tariffs with its own, slapping a 25 percent charge on $16 billion worth of U.S. goods. This followed a U.S. announcement that it would begin gathering levies on Chinese goods from later this month.

A semi-annual Treasury report, due out in October, could be another flashpoint. The last release in April refrained from naming China as currency manipulators but did criticize the country for the "non-market direction" of its economy.

But would the Trump administration be justified in its attacks on the currency? Probably not. Many currency experts agree that a weak yuan would actually be bad for China as so much of its supply chain is based around the wider Asian region. Thus meaning higher prices to produce Chinese goods with imported parts.

There's also Chinese debt denominated in the dollar, which would rise with any yuan weakening. Analysts also state that the yuan is not undervalued in this global environment and it's simply weakened alongside softening economic data from the world's second-largest economy.

"I don't think a strategy of aggressively pursuing currency depreciation would be a good thing for China," SocGen's Marcussen told CNBC last week. She concluded that any "significant" weakening from here would become a potential headwind.