The Trump administration has officially declined to brand China a currency manipulator, in another major U-turn for the US president, who had repeatedly pledged during his campaign to do so soon after taking office.
The reversal by the treasury department was one of the almost half-a-dozen instances when Donald Trump or his administration have gone back on his poll campaign promises.
On the campaign trail, Trump had called NATO “obsolete.” But this week he said NATO was no longer obsolete. His stance on Russia and Syrian President Bashar-al Assad has also done a 180.
On Friday, the treasury department in its six-monthly report to the Congress placed China, Germany, Japan, Korea, Switzerland and Taiwan in the “monitoring list” of countries that needed close attention for their currency practices.
The official move to not label China a currency manipulator was expected as Trump earlier this week had said this.
The department, however, said that both China and Germany should do more to reduce their large trade surpluses with the US.
The treasury department in a statement said the findings and recommendations of the report were intended to combat “potentially unfair currency practices” and support the growth of free and fair trade.
“The US cannot and will not bear the burden of an international trading system that unfairly disadvantages our exports and unfairly advantages the exports of our trading partners through artificially distorted exchange rates,” it said.
“Expanding trade in a way that is freer and fairer for all Americans requires that other economies avoid unfair currency practices, and we will continue to monitor this carefully,” said Treasury Secretary Steven Mnuchin.
The opposition Democratic Party leaders slammed Trump administration for going back on its poll promise.
“Unfortunately the president’s failure to name China a currency manipulator is symptomatic of a lack of real, tough action on trade against China. China steals our intellectual property, doesn’t let American companies compete in China, and has manipulated their currency causing the loss of millions of jobs,” said Senate Minority Leader Charles E Schumer.
He said China might not be manipulating their currency “at the moment because it doesn’t suit their economic needs” but “make no mistake about it, as soon as the tide turns they will,” he said, adding that the Trump has given them a “green light to steal our jobs”.
Schumer also said the best way to get China to cooperate on North Korea was to be tough on them with trade, which is first thing the Chinese government “cares about.”
During the campaign, Trump had often claimed that China was manipulating its currency to boost exports, costing the United States manufacturing jobs. He had promised to label the country a currency manipulator on ‘Day One’ of his presidency.
But the reversal could also mean that Trump and Chinese President Xi Jinping might have figured a way to fix the trade imbalance and the tension in the Korean peninsula during their meeting earlier this month in Florida.
The two leaders also had a telephonic call on Wednesday, when they discussed the situations in North Korea and Syria.
The treasury department, however, alleged that China has a long track record of engaging in persistent, large-scale, one-way foreign exchange intervention, doing so for roughly a decade to resist renminbi (RMB) appreciation even as its trade and current account surpluses soared.
“China continues to pursue a wide array of policies that limit market access for imported goods and services, and maintains a restrictive investment regime which adversely affects foreign investors,” it said.
It said it will scrutinise China’s trade and currency practices very closely, especially in light of the extremely sizable bilateral trade surplus that China has with the US.
“China will need to demonstrate that its lack of intervention to resist appreciation over the last three years represents a durable policy shift by letting the RMB rise with market forces once appreciation pressures resume,” it said.