China is not a currency manipulator according to US

Published: 28 Nov at 9 AM Tags: Dollar,

A semi-annual report produced by the US Treasury has found that China is not manipulating its currency in order to have an unfair advantage in terms of trade. The report admitted that Beijing needed to make further progress and that the yuan is currently undervalued but did not say that the currency was manipulated, a declaration that could lead to sanctions.

China is accused by its critics of deliberately keeping the yuan undervalued so that its exports are cheaper on the international market. In 2005 the yuan became a managed currency. Since then it has been gradually appreciating against the dollar and other major currencies. However, the issue of whether the Chinese authorities have been deliberately undervaluing the yuan remains a source of tension between Beijing and Washington.

Mitt Romney, the defeated Republican candidate for the White House, said that one of the first moves he would make if he was voted into office would be to declare the yuan a manipulated currency.

The report by the Treasury said since June 2010 the yuan had appreciated against the greenback by 9.3 per cent. Since then there has been a fall in China’s trade levels and current account surpluses.

Since last year the Chinese authorities have been moving to make the exchange rate regime more flexible by relaxing some of the controls on the exchange markets and on capital movements.