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US Treasury Drops Currency Manipulator Designation for China

© AFP 2023 / Fred DUFOURChinese 100 yuan notes. (File)
Chinese 100 yuan notes. (File) - Sputnik International
The decision comes as both countries move towards improving trade relations and sealing the Phase One trade agreement on Wednesday. To that end, Chinese Vice Premier Liu He, the head of the country's negotiating team in US-China trade talks, is slated to stay in Washington from Monday to Wednesday.

The US Department of the Treasury announced Monday that, as part of its semi-annual currency report, it will no longer designate China as a currency manipulator.

“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,” US Treasury Secretary Steve Mnuchin said in the Monday release from his department. “China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability.”

This announcement followed the US Treasury's delivery of its semiannual "Report on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States," which reviewed the currency practices of 20 top US trading partners. 

Mnuchin previously labeled China a "currency manipulator" in August 2019 after Beijing and the People's Bank of China allegedly violated "China's G20 commitments to refrain from competitive devaluation" and allowed the yuan to drop to a unprecedented level of seven yuan-per-dollar threshold. 

The designation, which had not been placed on China since 1994, was the first step in the Treasury's move to have the International Monetary Fund (IMF) "eliminate the unfair competitive advantage created by China's latest actions."

However, the IMF did not appear to agree with the US' assessment and declared in its annual review of China's economic policies that the yuan and Beijing were "broadly in line" with the fundamentals and not significantly over- or undervalued. 

While no nation is now currently labeled a "currency manipulator" by the US Treasury, the department has placed a total of 10 trading partners on its "Monitoring List": China, Germany, Ireland, Italy, Japan, Korea, Malaysia, Singapore, Switzerland and Vietnam.

During an interview Monday evening with the Fox Business TV network, US Trade Representative Robert Lighthizer said his office is "about finished" translating the Phase One trade agreement with China, which includes commitments on currency manipulation. Beijing and Washington are expected to ink the deal on Wednesday. The agreement will reverse the trend of nearly two years of tariff wars between the two economic superpowers.

"We're going to make it public on Wednesday before the signing," Lighthizer said.

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