China not labelled currency manipulator, but kept on US 'monitoring list'

The Treasury report recognised 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.
The Treasury report recognised 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. ST PHOTO: KIM KYUNG HOON

WASHINGTON • United States President Donald Trump's administration declined to name any major trading partner as a currency manipulator in a highly anticipated report, backing away from a key Trump campaign promise to slap such a label on China.

The semi-annual US Treasury currency report on Friday did, however, keep China on a currency "monitoring list" despite a lower global current account surplus, citing China's unusually large, bilateral trade surplus with the US.

Five other trading partners who were on last October's monitoring list - Japan, South Korea, Taiwan, Germany and Switzerland - also remain on the list, ensuring that the Treasury would apply extra scrutiny to their foreign exchange and economic policies.

The Treasury report recognised 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.

Foreign exchange experts told Reuters last week that a manipulator label was unlikely for Beijing.

Mr Trump, who on the campaign trail blamed China for "stealing" US jobs and prosperity by cheapening its currency, repeatedly promised to label the country as a currency manipulator on "day one" of a Trump administration - a move that would require special negotiations and could lead to punitive duties and other action.

The report did call out China's past efforts to hold down the yuan's value, saying this created a long- term "distortion" in the global trading system that "imposed significant and long-lasting hardship on American workers and companies."

The Treasury also warned that it will scrutinise China's trade and currency practices very closely and called for faster opening of China's economy to US goods and services and a shift away from exports to more domestic consumption.

REUTERS

A version of this article appeared in the print edition of The Sunday Times on April 16, 2017, with the headline 'China not labelled currency manipulator, but kept on US 'monitoring list''. Print Edition | Subscribe