Thu, May 30, 2019 - Page 10 News List

China not manipulating currency: US

CLOSELY WATCHED:Direct currency interventions by the People’s Bank of China in the past year remained limited, the US Department of the Treasury said in a report

AFP, WASHINGTON

The US Department of the Treasury expanded the number of countries subject to scrutiny in a semi-annual report released on Tuesday, but again found that neither China nor any other trading partners was manipulating its currency.

The department urged China to avoid allowing the yuan to weaken persistently — which would give its products more competitive advantage.

Germany remained on the US “monitoring list” due to its large trade surplus, as did Japan and South Korea, indicating they “merit close attention to their currency practices.”

Taiwan was again left off the list.

The nation was labeled a currency manipulator in 1988 and placed on the list in April 2016, October 2016 and April 2017.

The latest report also removed India and Switzerland, because for two consecutive reports they had both met only one of three criteria necessary for inclusion on the monitoring list.

Despite a bitter trade spat with China focused on bringing down the US trade deficit, the Treasury held back from escalating the fight further.

It said the report concluded that “direct intervention by the People’s Bank of China in the last year has been limited.”

However, the US “continues to urge China to take the necessary steps to avoid a persistently weak currency,” it added.

The closely watched report broadened the field of its scrutiny for potential exchange-rate manipulation, as a weak currency makes US products less competitive and could undermine Washington’s efforts to cut a soaring global trade imbalance.

US Secretary of the Treasury Steven Mnuchin said the department “is expanding the number of US trading partners it reviews to make currency practices fairer and more transparent.”

With the newly expanded list, the department put nine trading partners on the monitoring list, including Ireland, Italy, Malaysia, Singapore and Vietnam.

Beginning with this report, the department is assessing all US trading partners with annual trade surpluses in goods of more than US$40 billion.

Based on trade last year, that standard covered 21 countries with nearly US$3.5 trillion in goods trade with the US, the report said.

China’s currency dropped 3.8 percent against the US dollar in the second half of last year, making it 8 percent weaker over the last year.

However, China only triggered one of the criteria used to determine whether a country merits close monitoring.

A senior Treasury official told reporters that China still merited inclusion “given the importance of China and their large, increasing surplus.”

The analysis could become even more critical after the US Department of Commerce last week announced it intends to change its rules to impose duties on countries that “act to undervalue their currency relative to the dollar, resulting in a subsidy to their exports.”

In the details of the proposed change, the commerce department said it would “defer to Treasury’s evaluation as to undervaluation” of a currency.

However, a senior Treasury department official said that would be “a distinct, different process” from the currency report.

The text is largely symbolic, as it only calls for consultations with countries deemed to be currency manipulators, but would gain more teeth if the commerce department can impose duties to retaliate.

Additional reporting by CNA

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