US Declines to Label China Currency Manipulator
WASHINGTON: The Obama administration on Friday declined to label China a currency manipulator, although it said that China's currency remains significantly undervalued.
The decision came in a twice-a-year Treasury report on whether any nations are manipulating their currencies to gain trade advantages.
The report noted that China has allowed its currency, the renminbi, to rise in value by 10 percent against the dollar since June 2010 and even more when inflation is taken into account. But the report said that the currency still remains undervalued and more appreciation is needed.
The United States will also closely monitor Japan's currency policies, the report noted. Japan's central bank has just launched a new effort to bolster the Japanese economy. That effort has weakened the value of the Japanese yen and could widen the US-Japan trade gap.
US manufacturers contend that China is manipulating its currency to gain trade advantages. A weaker renminbi makes Chinese goods cheaper for American consumers and US goods more expensive in China.
The Obama administration has now declined to brand China as a manipulator for nine straight reports. It has argued that it was more likely that the United States will make progress on economic issues through negotiation rather than confrontation. Naming China as a currency manipulator would trigger talks that could lead eventually to US economic sanctions against China.
In March, Jacob Lew traveled to Beijing, his first trip abroad since being named Treasury secretary. During the trip, he discussed the need for China to do more to allow its currency to rise in value. He also addressed a number of other contentious economic issues between the world's two biggest economic powers, including a demand by Washington for China to do more to crack down on cyber-security threats to US companies.
The last time the United States named any country as a currency manipulator was in 1994 during the Clinton administration made that accusation against China.
On Japan, the report noted that the Japanese yen has fallen in value against the dollar by 12.5 percent just this year. That's occurred as the Japanese government and its central bank have pledged to pursue an aggressive policy to drive interest rates lower to bolster the Japanese economy.
The US government said it will continue to press Japan to use its economic policy to boost domestic consumer demand, and not as a trade weapon.
