The United States no longer sees China as a currency manipulator state, the Treasury Department announced on Monday (January 13th). The move comes as a high-ranking Chinese delegation arrives in Washington to sign "Phase 1" of the deal on Wednesday to end 18 months of the trade war.
In its semi-annual report, the Treasury Department judges that China has made "binding commitments to refrain from any competitive devaluation" of the yuan in this context. Under these conditions, adds the Treasury, China "should no longer be designated as a currency manipulator".
Washington believes, however, that China must take necessary measures to prevent the yuan from remaining a "lastingly weak" currency. China also remains on a list of 10 countries to watch, along with Switzerland, which joins Germany, South Korea, Ireland, Italy, Japan, Malaysia, Singapore and Vietnam, specifies the document published by the Treasury.
"Abdication"
Senate Democrat leader Chuck Schumer, a critic of China's monetary and trade policy, castigated what he called an "abdication" of the Trump administration. "China is a currency manipulator, it is a fact. Unfortunately, President Trump prefers to yield to President Xi (Jinping) than to stay on a hard line against China," he reacted.
The accusations of manipulation of its currency by China were a subject of recurring tension with the United States long before the Trump administration and a president who focuses on the issue of the value of the dollar and the trade imbalance. But the Trump administration was the first, since 1994, to take the plunge and formally accuse Beijing of manipulation.
Under US law, such an accusation forces both parties to negotiate. In the event of disagreement Washington may impose punitive customs tariffs to compensate for the competitive advantage that a weak currency gives. In the present case, the gesture was mainly symbolic, Donald Trump having already imposed punitive tariffs on hundreds of billions of dollars in imports to force the Chinese to come to the negotiating table.
With AFP and Reuters
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