The Bush administration on Wednesday announced it would not brand China as a country that was manipulating its currency to gain unfair trade advantages.

Treasury's decision was certain to anger lawmakers who claim China is dragging its feet deliberately while flooding US markets with cheaply priced goods, but Treasury said Beijing was moving, albeit too slowly, on currency reforms.

Yuan notes at a branch of the China Minsheng Bank in Nanjing, April 28, 2006. The Treasury Department ruled on Wednesday that China was not a currency manipulator but pledged to 'actively and frankly' push Beijing toward faster exchange-rate flexibility that would let its yuan rise in value. [Reuters]

"Given our strong disappointment and the importance of China to the world economy, the Treasury Department will closely monitor China's progress in implementing its economic rebalancing strategy...and continue actively and frankly to press China to quicken the pace of renminbi flexibility."

The administration said in the latest currency report to Congress that it did not believe China technically met the definition in the law of a currency manipulator.

The report noted that China last July announced it was abandoning a fixed link of the yuan's value to the dollar, although since that time the yuan has risen in value by only about 3 percent.

"We are not satisfied with the progress made on China's exchange rate regime and we will monitor closely China's progress every step of the way," Treasury Secrectary Snow said.

The currency report, which the administration must present to Congress every six months, was delayed by a few weeks, until after Chinese President Hu Jintao and President Bush discussed the currency dispute during a White House meeting on April 20.

The administration had hoped that Hu would signal China would move faster to allow its currency to rise in value against the dollar, but no such announcement came out of the half-day summit.

A designation as a currency manipulator would trigger consultations between the two nations and could lead to trade sanctions if the United States won a case on the issue before the World Trade Organization.

The administration contends it can make more progress by lobbying China to make changes than by bringing a WTO case. It has been raising the issue with more intensity over the past three years.