US Treasury: China not a currency manipulator

The United States designed none of its major trading partners as a currency manipulator Friday, but put six countries, including China, Japan and South Korea, on its "monitoring list" for closer watch on their currency practices.

"China has a long track record of engaging in persistent, large-scale, one-way foreign exchange intervention", the Treasury Department said in its semiannual report on the foreign-exchange policies of major USA trade partners.

Trump declared on Wednesday that he'll back away from a campaign promise to name China a currency manipulator, a move that would have created friction between the world's largest economies as they try to boost trade cooperation and address North Korea's nuclear threat.

"Treasury has established criteria specified in the Trade Facilitation and Trade Enforcement Act of 2015..."

No major trading partner met the three criteria for enhanced analysis or to be labeled a currency manipulator in the second half of 2016.

Germany, along with Japan, South Korea, Taiwan and Switzerland were also on the "monitoring list" in the US Treasury report.

The report has traditionally been used as a diplomatic tool to prod other countries whose currency policies were deemed a threat to USA industries.

Treasury Secretary Steven Mnuchin said ensuring a level playing field for United States businesses is an "essential component of this administration's strategy".

After a friendly meeting in Florida with Chinese President Xi Jinping last week, Trump changed his mind and told the The Wall Street Journal in an April 12 interview that "they're not currency manipulators".

The Treasury report recognized what many analysts have said over the past year, namely that China has recently intervened in foreign exchange markets to prop up the value of its yuan currency, not push it lower to make Chinese exports cheaper.

No major U.S. trading partner met Congressional standards for currency manipulation in the 2nd half of 2016.

Instead, the first currency review of the Trump administration singled out China and five other countries as needing to be monitored for their currency practices. Washington has not branded any country a currency manipulator since 1994.

"The United States can not and will not bear the burden of an worldwide trading system that unfairly disadvantages our exports and unfairly advantages the exports of our trading partners through artificially distorted exchange rates", it said.

"When our trading partners engage in currency manipulation, they impose significant, and often long-lasting hardship on American workers and businesses".

Trump did say he thought the dollar was "getting too strong" - a comment that sent the US currency falling, though it subsequently rebounded. However, the report said that if there is upward pressure on the yuan in the future, China should allow the currency to appreciate according to market conditions.

Vanessa Coleman

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