New | China not a currency manipulator: Obama Treasury Department

The Treasury Department for the final time during President Barack Obama’s tenure declined to label China a currency manipulator, in an implicit rejection of Republican nominee Donald Trump’s hard-line approach to the world’s second-biggest economy.

The Obama administration added Switzerland to a currency watch list that already included China, Japan, Germany, South Korea and Taiwan, according to a semi-annual report on global foreign-exchange policies from the Treasury. However, it found that no major trading partner met the legal definition of a currency manipulator, and the US said China’s recent efforts to prop up the yuan were preventing a rapid depreciation that would hurt the global economy.

China was found to meet only one of three criteria used to determine the watch list, compared with two of three in April. If China still meets only one condition in the next report, it could be removed from the list.

Applying the manipulator label to China would represent a major shift from US practise over more than two decades, and would risk provoking retaliation. The last time the US designated China a currency manipulator was in 1994, when Bill Clinton was president.

Under a 1988 law, the Treasury is required to assess whether major trading partners game their currencies to prevent balance-of-payments adjustments or to gain an unfair trade advantage.