US Holds Back on Calling China a Currency Manipulator, but Expresses Concerns
U.S. elects against characterizing China as a currency manipulator, yet criticizes its transparency practices instead.
WASHINGTON (AP) - The US has decided to refrain from labeling China a currency manipulator in its latest Treasury report, instead leveling accusations of a lack of transparency in Beijing's exchange rate policies. The report, titled "Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States," was released on Thursday.
This decision comes as the US administration seeks to broker a trade deal with China, avoid a prospective trade war between the two economic giants.
Previewing the report, a Treasury official noted that the US reserved the right to identify any potential future currency manipulation by China, with a determination on the renminbi (RMB) expected in the fall. In Donald Trump's first term, China was designated a currency manipulator by the Treasury in 2019, a status it hadn't held since 1994.
Scott Bessent, the current Treasury Secretary, stated, "The administration has made it clear that incentivizing an unbalanced trading relationship with the US is no longer acceptable. Moving forward, Treasury will utilize all available resources to implement effective countermeasures against unfair currency practices."
The reported decision not to sanction China for currency manipulation followed news of a "very positive" conversation between Trump and China's Xi Jinping, with the two agreeing to hold trade discussions in an effort to resolve tariff disputes and address global rare earth mineral supply issues.
Trump had previously imposed 145% tariffs on Chinese goods, only to lower them to 30% for a 90-day period, allowing for negotiations. In response, China lowered its taxes on US goods from 125% to 10%. The back-and-forth has resulted in significant market volatility and threatens to negatively impact trade between the nations.
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