SHANGHAI (REUTERS) - Volatility in China's yuan this month is a normal market reaction to escalating trade frictions stoked by the United States and was caused, to some extent, by Washington's decision to raise tariffs, a senior Chinese central bank official said.

Zhu Jun, director-general of the People's Bank of China's international department, made the comments on Saturday (Aug 10) at a forum held in the northern Chinese province of Heilongjiang.

The US Treasury Department last Monday (Aug 5) labelled China a currency manipulator, hours after China let the yuan drop through a key support level to its lowest point in more than a decade. The moves jolted financial markets, fueling fears of a global currency war.

Days earlier, US President Donald Trump had vowed to impose a 10 per cent tariff on US$300 billion (S$415 billion) of Chinese imports from Sept 1, ending a temporary truce and sharply escalating the trade dispute.

Zhu said that the yuan's move was a normal reaction to Trump's tariff threat.

"The labeling...violates basic, common economic sense and international consensus, and is unconvincing," Zhu said, adding that the Chinese economy was resilient and capable of coping with various situations.

The year-long trade war between the world's two largest economies has already spread beyond tit-for-tat tariffs on goods to other areas such as technology, and analysts caution retaliation could widen in scope and severity, weighing further on business confidence and global economic growth.

The yuan lost 1.6 per cent against the dollar last week, but there were signs in the last few sessions that authorities were trying to stabilise it.