U.S. removes China from currency manipulator list
WASHINGTON — The Treasury Department on Monday dropped China from a list of nations it alleges manipulate their currency values to gain an unfair trade advantage, greasing the wheels for the scheduled signing of a U.S.Chinese trade deal on Wednesday.
In a semiannual report, Treasury officials said no countries met the standards set by Congress for the “manipulator” label. But the political context for the decision was hard to miss.
“The Treasury Department has helped secure a significant phase one agreement with China that will lead to greater economic growth and opportunity for American workers and businesses,” said Treasury Secretary Steven Mnuchin. “China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability.”
The move reversed the department’s decision in August to add China to the list. It also came two days before President Donald Trump is scheduled to sign a partial trade deal with China in a White House ceremony that is expected to disclose the details of Chinese promises on currency and other trade matters.
Scott Kennedy, a specialist on the Chinese economy at the Center for Strategic and International Studies, said putting China on the list last year had been a political step designed to pressure Beijing in the middle of trade talks.
“China has not been manipulating its currency, so this is just recognizing reality,” said David Dollar of the Brookings Institution, a former Beijing-based Treasury official. “The phase 1 deal confirms this so it would have been inconsistent for the U.S. to sign the deal and continue to call China a manipulator.”
Still, the administration shift was denounced by some lawmakers.
“China is a currency manipulator — that is a fact,” insisted Senate Minority Leader Chuck Schumer, D-N.Y. “Unfortunately, President Trump would rather cave to President Xi [Jinping] than stay tough on China.”
The Treasury report criticized Beijing for turning away from economic liberalization to a more state-directed approach and “increasing reliance on non-market mechanisms.”
China’s growing use of government subsidies and coercive trade practices was “distorting” its relationships with key trading partners, the report added.
The president has long accused China of depressing the yuan’s value to make its products more affordable for foreign customers, thus contributing to the chronic trade imbalance with the U.S.
One dollar now buys about 6.9 yuan, little changed from August and up about 2% over the past year.
Despite Trump’s previous claims, the International Monetary Fund has said repeatedly that the yuan is fairly valued.