US re­moves cur­rency ma­nip­u­la­tor la­bel for China

The Korea Times - - FRONT PAGE -

WASH­ING­TON (Reuters) — The U.S. Trea­sury Depart­ment dropped its des­ig­na­tion of China as a cur­rency ma­nip­u­la­tor Mon­day, days be­fore top of­fi­cials of the world’s two largest economies were due to sign a pre­lim­i­nary trade agree­ment to ease an 18-month-old tar­iff war.

The widely ex­pected de­ci­sion came in a long-de­layed semi-an­nual cur­rency re­port, re­vers­ing an un­ex­pected move by Trea­sury Sec­re­tary Steven Mnuchin last Au­gust at the height of U.S.-China trade ten­sions.

Mnuchin had ac­cused China of de­lib­er­ately hold­ing down the value of its yuan cur­rency to cre­ate an un­fair trade ad­van­tage, just hours af­ter Pres­i­dent Don­ald Trump, an­gered at the lack of progress in trade ne­go­ti­a­tions, had also ac­cused China of ma­nip­u­lat­ing its cur­rency.

The Trea­sury Depart­ment had not la­beled China a cur­rency ma­nip­u­la­tor since 1994. Bei­jing had re­cently met just one of the depart­ment’s three cri­te­ria needed for such a des­ig­na­tion — a large bi­lat­eral trade sur­plus with the United States.

In its lat­est cur­rency re­port, the Trea­sury said that as part of the Phase 1 trade deal, China had made “en­force­able com­mit­ments to re­frain from com­pet­i­tive de­val­u­a­tion” and agreed to pub­lish rel­e­vant data on ex­change rates and ex­ter­nal bal­ances.

Chi­nese Vice Premier Liu He ar­rived in Wash­ing­ton, Mon­day, for a White House cer­e­mony to sign the trade deal with Trump. Peo­ple fa­mil­iar with the ne­go­ti­a­tions said that although the ma­nip­u­la­tor des­ig­na­tion had no real con­se­quences for Bei­jing, its re­moval was an im­por­tant sym­bol of good­will for Chi­nese of­fi­cials.

U.S. Trade Rep­re­sen­ta­tive Robert Lighthizer told Fox Busi­ness, Mon­day that the trans­la­tion of the U.S.-China trade agree­ment was al­most com­pleted and the text of the deal would be made pub­lic Wed­nes­day be­fore the cer­e­mony.

The cur­rency re­port said the Chi­nese yuan, also known as the ren­minbi, had de­pre­ci­ated as far as 7.18 per U.S. dol­lar in early Septem­ber, but had re­bounded in Oc­to­ber and was cur­rently trad­ing at about 6.93 per dol­lar.

“In this con­text, Trea­sury has de­ter­mined that China should no longer be des­ig­nated as a cur­rency ma­nip­u­la­tor at this time,” the re­port said.

How­ever, it added that China should take de­ci­sive steps to avoid a per­sis­tently weak cur­rency and al­low greater mar­ket open­ness to strengthen its long-term growth prospects.

There was no im­me­di­ate re­ac­tion from Bei­jing. In Au­gust, China’s cen­tral bank de­nied it had in­ter­vened to weaken the yuan, and said Wash­ing­ton’s des­ig­na­tion of China as a cur­rency ma­nip­u­la­tor se­ri­ously harmed in­ter­na­tional rules.

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