Beijing is not a currency manipulator but China's exchange rate practices and the yuan's recent decline are of "particular concern," US Treasury Steven Mnuchin said Wednesday.
In putting Beijing and five other US trading partners on notice, the Treasury again refrained from escalating a fight over China's currency as US President Donald Trump had once pledged to do on the campaign trail. "Of particular concern are China's lack of currency transparency and the recent weakness in its currency," Mnuchin said in releasing a twice-yearly report to Congress on how country's manage exchange rates and trade.
"These pose major challenges to achieving fairer and more balanced trade and we will continue to monitor and review China's currency practices, including through ongoing discussions with the People's Bank of China." Washington has long argued that China keeps its currency artificially low to make its exports more competitive but in recent years the yuan or renminbi (RMB) has strengthened and is viewed by economists as more in line with economic fundamentals.
Still, as US interest rates have risen, the US dollar has strengthened further, which makes American exports more expensive.
Washington and Beijing are locked in battle over the yawning US-China trade deficit, which Trump describes as a job killer. Washington has slapped punishing tariffs on about half of all China's goods exports to the United States, with talks to resolve the matter at an apparent impasse. Trump in April 2017 dropped his campaign pledge to label Beijing a currency manipulator, telling The Wall Street Journal that Beijing was not intervening to weaken its currency.