Trump administration officially declines to label China currency manipulator
- Author: Joey Payne Apr 17, 2017,
Apr 17, 2017, 4:42
As expected after President Trump's recent comments, the U.S. Treasury has decided NOT to brand China a currency manipulator.
"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.
USA 100 dollar banknotes and Chinese 100 yuan banknotes are seen in this picture illustration in Beijing, China, January 21, 2016.
But the US Treasury concluded China was doing the opposite, preventing its yuan from falling against the dollar and other currencies. It kept China, South Korea, Japan, Taiwan, Germany and Switzerland on its foreign-exchange monitoring list.
"Expanding trade in a way that is freer and fairer for all Americans requires that other economies avoid unfair currency practices, and we will continue to monitor this carefully", he said in statement.
"China now has an extremely large and persistent bilateral trade surplus with the United States, which underscores the need for further opening of the Chinese economy to American goods and services", as well as quicker reforms to boost household consumption, according to the Treasury report.
President Donald Trump campaigned in the 2016 U.S. election on the pledge he would end what he claimed was widespread manipulation of currency rates that discriminated against American manufacturers, but the report found no evidence of such policies. It also noted Korea's track record of "asymmetric foreign exchange interventions". The US trade deficit with China in 2016 was over $347 billion (327 billion euros).
The last time the USA designated a country a currency cheater was China in 1994 under President Bill Clinton.
Trump declared on Wednesday that he would 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.
"When our trading partners engage in currency manipulation, they impose significant, and often long-lasting hardship on American workers and businesses", Treasury Secretary Steven Mnuchin said in a press release that accompanied the report.
Taiwan's Central Bank said Saturday that the results have been anticipated by the bank so the latest USA currency report is unlikely to impose any material adverse impact on the local foreign exchange market. The countries agreed to a 100-day plan for trade talks to boost US exports to China, and China said it was willing to offer USA companies greater access to its markets for beef and financial services.
On Friday, the Treasury Department issued its first report on the currency practices of America's trading partners.
"Treasury also places high importance on greater transparency of China's exchange rate and reserve management operations and goals", said the report.
Trump's policy reversal on China sends a signal to global finance chiefs ahead of next week's meeting in Washington, D.C., that Trump could soften the aggressive trade positions he staked out during his campaign.