U.S. Treasury Department does not label China currency manipulator

Adjust Comment Print

The U.S. Department of Treasury has kept Taiwan on its currency monitoring list after Washington released its latest twice-a-year foreign exchange policy report on Friday.

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

The department is required by law to report to Congress twice a year on whether America's major trading partners are gaming their currencies. Treasury finds that six major trading partners warrant being placed on the Monitoring List for special attention: "China, Germany, Japan, Korea, Switzerland and Taiwan", it said.

The report contains an implicit threat that unless China gives U.S. exporters greater market access and further rebalances the economy, the United States could act to rectify the trade imbalance, according to Eswar Prasad, former head of the International Monetary Funds China division.

Commerce Secretary Wilbur Ross has said that the issue of "currency misalignment" - which could also include unintentional devaluations - will be addressed in a study of trade abuses by nations that run large surpluses with the US, which is due to be ready in June.

While Trump and Chinese President Xi Jinping last week agreed to 100-day trade talks, U.S. business leaders in China have expressed concern about a lack of progress in gaining further access to the Chinese market despite years of negotiations. "And no doubt Beijing will manipulate its currency in the future unless it is deterred in some way", said Scott Paul, the president of the Alliance for American Manufacturing, which represents industry and steelworkers.

Zhou said plans for the U.S. and China to spend 100 days looking for ways to tackle the trade imbalance were "just a beginning" and could result in China lifting a ban on American beef and opening up its financial market in the short term.

He said progress on trade was needed to narrow the deficit between the two countries but that should be achieved through increasing USA exports to China, not cutting USA imports of Chinese goods.

Economists and business leaders had said that China wasn't manipulating its currency.

"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", Mnuchin added.

Schumer also said that the best way to get China to cooperate on North Korea was to be tough on them with trade, which is first thing the Chinese government "cares about".

"Moreover, China continues to pursue a wide array of policies that limit market access for imported goods and services, and maintains a restrictive investment regime which adversely affects foreign investors".

As recently as April 2, in an interview with the Financial Times newspaper, Trump had accused China of keeping its currency artificially low to give its exporters an unfair price advantage in world markets. The list was unchanged from the previous report in October.

"Treasury places significant importance on China adhering to its G-20 commitments to refrain from engaging in competitive devaluation and not to target China's exchange rate for competitive purposes".