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Trump administration report labels no US trading partners as currency manipulators

Trump administration report labels no US trading partners as currency manipulators

China and Germany are not manipulating the value of their currencies to gain an unfair trade advantage, but both should do more to reduce their large trade surpluses with the United States, the Treasury Department said yesterday.

US President Donald Trump this week said in an interview that China has not been manipulating its currency, RMB (yuan), for months, a sharp reversal from his campaign promise.

While the report stops short of labeling the country a currency manipulator, the Treasury Department report criticizes China for past currency manipulation and warns that the United States "will be scrutinizing China's trade and currency practices very closely".

Before the elections, President Trump had vowed to label China a currency manipulator on Day One of his administration.

While Trump and Chinese President Xi Jinping last week agreed to 100-day trade talks, U.S. business leaders in China have expressed concern about a lack of progress in gaining further access to the Chinese market despite years of negotiations. But as the days pass, some supporters and critics of Trump's tough talk on trade are losing patience. Trump's threat to slap harsh tariffs on Chinese goods has given way to a bid to mend fences with Beijing.

China held down the value of its currency, called the renminbi, RMB or yuan, to help its exporters for roughly a decade.

In fact, in recent years the Chinese government has intervened to prop up the currency, economists say.

The Treasury left the criteria for manipulation unchanged at having a trade surplus with the US above $20 billion; having a current-account surplus amounting to more than 3 percent of gross domestic product; repeated currency depreciating by buying foreign assets equivalent to 2 percent of output over the year.

After a friendly meeting in Florida with Chinese President Xi Jinping last week, Trump changed his mind and told the The Wall Street Journal in an April 12 interview that "they're not currency manipulators". The designation means there will be intense talks between the USA and the labeled country and can lead to tariffs imposed by the US. Such tariffs, though, could be overturned in a review by the World Trade Organization.

All five of these countries were also on the list in the previous report.

On Friday, the Treasury Department issued its first report on the currency practices of America's trading partners. Its surplus with the United States totaled $65 billion past year.

The report also called on Japan to do more "to revive domestic demand and combat low inflation while avoiding a return to export-led growth".

-China Business Council, said concerns persist that China would make commitments but not follow through or take only incremental steps.While the government could remove some industries from a list of sectors restricted for foreign investment, businesses could still face red tape and licensing hurdles or be restricted to regional pilot zones."There are lots of ways China can call something an opening and it is not", Parker said.Xi proposed further cooperation on infrastructure development in meetings with Trump, but Chinese state-owned companies working on major US public works is a politically fraught issue in the United States, where Trump campaigned on creating jobs.High-tech industries where China hopes to funnel investment, such as semiconductors, virtual reality and autonomous vehicles, are considered sensitive.

USA 100 dollar banknotes and Chinese 100 yuan banknotes are seen in this picture illustration in Beijing, China, January 21, 2016. The dollar's strength in the past two years has been a drag on USA exports.

Jacob Parker, vice president of China operations at the U.S.

He said China may 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". The administration has also put forward a draft proposal on renegotiating the North American Free Trade Agreement with Mexico and Canada that dropped some of the tougher positions Trump took during the campaign.


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