US: China not currency manipulator

WASHINGTON - US Treasury Department on Tuesday said in its latest semi-annual currency report that China did not manipulate its currency, but Chinese currency still remained undervalued.

The report outlined actions taken by China to appreciate its currency and move to a more market determined exchange rate. The renminbi has appreciated by 9.3 percent in nominal terms and 12.6 percent in real terms against the US dollar since June 2010, said the department.

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, noted the Report to Congress on International Economic and Exchange Rate Policies of major US trading partners including China, Japan and the eurozone.

"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 department said.

Nonetheless, the department added, evidence available suggested the renminbi remained significantly undervalued, and further appreciation of the renminbi against the US dollar and other major currencies was warranted.

The US Omnibus Trade and Competitiveness Act of 1988 requires the Treasury Department to provide reports on whether countries manipulate the rate of exchange between their currency and the US dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.

During this year's US presidential election campaign, Republican presidential candidate Mitt Romney had vowed to label China as a currency manipulator if he won the White House.

The department last published the twice-yearly currency report on May 25, 2012. In seven previous such reports from the Obama administration, the US government has declined to label China as a currency manipulator.