US Treasury notes yuan's rising value
November 29, 2012, Thursday
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Print Edition
Print Edition
The Obama administration has declined to label China a currency manipulator, noting that it has let the yuan rise nearly 10 percent in value against the dollar since June 2010.
The decision came in a Treasury report on whether any nations are manipulating their currencies to gain trade advantages. Despite its decision, the administration said that the yuan remained "significantly undervalued," and it urged China to make further progress.
US manufacturers contend that China is "manipulating" its currency to gain a trade advantage. A weaker yuan makes Chinese goods cheaper for American consumers and US goods more expensive in China.
The Treasury is required to report its findings on currency manipulation to Congress twice a year. The last time the United States named a country a currency manipulator was in 1994, when the Clinton administration made that accusation against China.
Since then, both Democratic and Republican administrations have determined that they can make more progress in narrowing America's trade gap with China through negotiation rather than confrontation.
But during this year's presidential campaign, Republican nominee Mitt Romney argued that this approach had failed. He said he would label China a currency manipulator on his first day in office.
Such a designation could eventually lead to higher tariffs on Chinese goods entering the US. But such tariffs could also trigger a trade war with a country that is the fastest-growing market for US exports.
The deadlines for the currency report are April 15 and October 15 each year. But the Obama administration announced in October that it would delay the fall report until after meetings of finance ministers in early November. That decision also delayed the report until after the election.
The Treasury said in its report the yuan had risen in value by 9.7 percent since June 2010, and by 12.6 percent when inflation is taken into account. China's trade and current account surpluses have both fallen to 2.6 percent of gross domestic product from peaks of 8.8 and 10.1 percent respectively of GDP, it said.
"The Chinese authorities have substantially reduced the level of official intervention in exchange markets since the third quarter of 2011, and China has taken a series of steps to liberalize controls on capital movements, as part of a broader plan to move to a more flexible exchange rate regime," the report said.
Still, the Treasury said the yuan remained significantly undervalued. It vowed to keep pressing China to let its currency rise further to "level the playing field for American workers and businesses and support a strong, sustainable and balanced global economy."
The US trade deficit with China reached US$29.1 billion in September. It is running 6.8 percent ahead of last year's record pace. It has long been the largest US trade gap with any one country.
The decision came in a Treasury report on whether any nations are manipulating their currencies to gain trade advantages. Despite its decision, the administration said that the yuan remained "significantly undervalued," and it urged China to make further progress.
US manufacturers contend that China is "manipulating" its currency to gain a trade advantage. A weaker yuan makes Chinese goods cheaper for American consumers and US goods more expensive in China.
The Treasury is required to report its findings on currency manipulation to Congress twice a year. The last time the United States named a country a currency manipulator was in 1994, when the Clinton administration made that accusation against China.
Since then, both Democratic and Republican administrations have determined that they can make more progress in narrowing America's trade gap with China through negotiation rather than confrontation.
But during this year's presidential campaign, Republican nominee Mitt Romney argued that this approach had failed. He said he would label China a currency manipulator on his first day in office.
Such a designation could eventually lead to higher tariffs on Chinese goods entering the US. But such tariffs could also trigger a trade war with a country that is the fastest-growing market for US exports.
The deadlines for the currency report are April 15 and October 15 each year. But the Obama administration announced in October that it would delay the fall report until after meetings of finance ministers in early November. That decision also delayed the report until after the election.
The Treasury said in its report the yuan had risen in value by 9.7 percent since June 2010, and by 12.6 percent when inflation is taken into account. China's trade and current account surpluses have both fallen to 2.6 percent of gross domestic product from peaks of 8.8 and 10.1 percent respectively of GDP, it said.
"The Chinese authorities have substantially reduced the level of official intervention in exchange markets since the third quarter of 2011, and China has taken a series of steps to liberalize controls on capital movements, as part of a broader plan to move to a more flexible exchange rate regime," the report said.
Still, the Treasury said the yuan remained significantly undervalued. It vowed to keep pressing China to let its currency rise further to "level the playing field for American workers and businesses and support a strong, sustainable and balanced global economy."
The US trade deficit with China reached US$29.1 billion in September. It is running 6.8 percent ahead of last year's record pace. It has long been the largest US trade gap with any one country.
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