Trump administration declines to label China a currency manipulator

The latest report's censure of China and other countries-including South Korea and Germany-could be used in the future as a pretext for new tariffs.

President Donald Trump campaigned in the 2016 United States 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.

South Korea met only two out of three criteria to become a currency manipulator - trade surplus, current account surplus and market intervention.

Trump's Treasury took the same route as the Obama administration did a year ago, putting Germany and China on watch for potential problems.

The Treasury did not alter its three major thresholds for identifying currency manipulation put in place a year ago by the Obama administration: a bilateral trade surplus with the United States of $20 billion or more; a global current account surplus of more than 3 percent of gross domestic product, and persistent foreign exchange purchases equal to 2 percent of GDP over 12 months.

China and Germany are not manipulating the value of their currencies to gain an unfair trade advantage, but both should do more to reduce their large trade surpluses with the United States, the Treasury Department said Friday.

The Treasury Department, in its semiannual report on exchange rates sent to Congress, has not labeled any country as a currency manipulator but it kept six countries on the monitoring list that merit close attention for their currency practices.

FILE - euros, the Hong Kong dollar, US dollar, Japanese yen, British pound and Chinese 100-yuan banknotes are seen in a picture illustration shot, January 21, 2016. Washington has not branded any country a currency manipulator since 1994.

"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.

Still, despite that reversal, the report said a decade of holding down the renminbi had imposed "significant and long-lasting hardship on American workers and companies" and left China with the largest trade surplus of any country against the United States - $347 billion a year ago. "Treasury urges Korea to enhance the flexibility of the exchange rate and will be closely monitoring Korea's currency intervention practices".

"They're not currency manipulators", he said.

The Treasury report's language on Japan was similar to past reports, and focused on the need for structural reforms to improve domestic demand, analysts said.

During the campaign, Trump had repeatedly called China a manipulator, saying, "They're killing us" by devaluing their currency to make it harder for American companies to compete against Chinese products.

"China will need to demonstrate that its lack of intervention to resist appreciation over the last three years represents a durable policy shift by letting the RMB rise with market forces once appreciation pressures resume", it said.

  • Leroy Wright