US Treasury reverses currency manipulator label for China

Washington: The United States on Monday removed the currency manipulator label it imposed on China last summer, in a sign of easing tensions between the two economic powers after nearly two years of conflict.

Just two days before President Donald Trump is set to sign a “phase one” trade agreement with China, the US Treasury said in its semi-annual report to Congress that the yuan has strengthened and Beijing is no longer considered a currency manipulator.

Although Treasury refrained from slapping the label on China in its report last May, Trump in August angrily accused Beijing of weakening its currency “to steal our business and factories,” re-stating a long-standing grievance.

Chinese authorities in August allowed the yuan to fall below 7 to the dollar for the first time in a decade, sending shudders through stock markets at the time and stoking Trump’s ire.

“Over the summer, China took concrete steps to devalue its currency,” the yuan or renminbi (RMB), and those moves “left the RMB at its weakest level against the dollar in over 11 years,” Treasury said.

However, more recently was strengthened to 6.93 to the dollar and Treasury said the trade pact addresses currency issues.

“In this agreement, China has made enforceable commitments to refrain from competitive devaluation and not target its exchange rate for competitive purposes,” Treasury Secretary Steven Mnuchin said in a statement.

However, that commitment is identical to the one Beijing has long made as part of the Group of 20 major global economies.