Strong US dollar a threat to Trump campaign pledges
- Author: Joanne Flowers Apr 15, 2017,
Apr 15, 2017, 17:18
A US Treasury spokesman confirmed that the Treasury Department's semi-annual report on currency practices of major trading partners, due out later this week, will not name China a currency manipulator.
No country met the three criteria to be labelled a currency manipulator in the second half of 2016.
The Treasury notified Seoul that it was closely monitoring its currency intervention practices.
The U.S. report was the first since Donald Trump was sworn in as president last January, and drew attention because of his predictions during the election campaign that he would label China as a currency manipulator.
With (Other OTC: WWTH - news) a trade surplus in goods with the United States of $347 billion previous year, and continued policies that restrict free trade and foreign investment, "Treasury will be scrutinizing China's trade and currency practices very closely".
Beijing has not intervened recently in markets to weaken the value of its currency - the third criteria - and in fact has tried to keep the renminbi from falling further amid the country's relatively sluggish growth rate.
"The United States can not and will not bear the burden of an global trading system that unfairly disadvantages our exports and unfairly advantages the exports of our trading partners through artificially distorted exchange rates", it said.
"I think the United States made a decision to forego (labeling China a currency manipulator) this time because it wants China's cooperation on North Korea", said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.
In a statement, the Treasury department said the findings and recommendations of the report are meant to combat "potentially unfair currency practices" and support the growth of free and fair trade.
"When our trading partners engage in currency manipulation, they impose significant, and often long-lasting hardship on American workers and businesses", he said. "Treasury is committed to aggressively and vigilantly monitoring and combating unfair currency practices". The department, however, said that both China and Germany should do more to reduce their large trade surpluses with the US.
The reversal on branding China a currency manipulator is among several changes in which Trump has softened tough stances he had taken during the campaign.
Now, China needed to show that its lack of intervention in the currency markets "to resist appreciation" over the past three years was a "durable" policy by allowing the yuan to strengthen "once appreciation pressures resume", the Treasury said.