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Trump admin. declines to brand China a currency manipulator

US President Donald Trump's administration declined to name any major trading partner as a currency manipulator in a highly anticipated report on Friday, backing away from a key Trump campaign promise to slap such a label on China.

Trump heaped criticism on China during his campaign saying they deliberately undervalued their currency, the yuan, to gain an advantage in worldwide trade and create a wide trade deficit with the United States.

"They're not currency manipulators", he said in an interview.

"Additionally, U.S. Department of the Treasury established a "Monitoring List" of major trading partners that merit close attention to their currency practices".

The report is the latest sign of a dramatic shift in economic policy for Trump, who won the support of many voters by promising to get tough on the country's biggest trading partners, especially China and Mexico.

"Expanding trade in a way that is freer and fairer for all Americans requires that other economies avoid unfair currency practices, and we will continue to monitor this carefully", he said.

The U.S. report said Asia's fourth-largest economy posted US$28 billion in goods surplus with the U.S. last year, with its current account surplus accounting for 7 percent of the country's gross domestic product.

The association said South Korea's trade surplus with the USA was caused by non-currency factors, not currency manipulation.

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

Zhou Shijian, a senior fellow at Tsinghua University's Institute of International Relations, said the Treasury made a "right and realistic decision" not to label China as a currency manipulator, something China had not been branded since 1992. The three are: a significant bilateral trade surplus with the US; a material current account surplus; and the involvement in persistent one-sided intervention in the foreign exchange market.

But in his interview with The Wall Street Journal, Trump said he had decided that China hadn't recently been manipulating its currency after all.

"When our trading partners engage in currency manipulation, they impose significant, and often long-lasting hardship on American workers and businesses", Treasury Secretary Steven Mnuchin said in a press release that accompanied the report.

This was the Trump administration's first release of the twice-yearly report, which evaluates the foreign exchange policies of major USA trading partners.

In its report to Congress, the Treasury Department noted that Beijing had intervened in currency markets for about a decade to depress the value of its currency, the renminbi. He publicly retreated from that position after meeting with Chinese President Xi Jinping in Florida last weekend.

The monitoring list was added to the exchange rate report as part of the customs enforcement law.

"The basic message is that Japan needs to expand its domestic demand and one can read this as them telling Japan to import more American goods", said Minami of the Norinchukin Research Institute.



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