US-China relations: Treasury Secretary Janet Yellen plans to spare China from currency manipulator label

US Treasury Secretary Janet Yellen will opt to not name China as a currency manipulator in her first semi-annual foreign exchange report, according to people familiar with the matter

The US designated China as a currency manipulator in mid-2019 only to lift the label five months later as part of the phase one trade deal discussions

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The offshore yuan extended its intraday gain slightly following the news, strengthening around 0.2 per cent to touch a new high for the day of around 6.5462 per US dollar. Photo: Bloomberg

Published: 9:46am, 13 Apr 2021Updated: 9:46am, 13 Apr 2021

US Treasury Secretary Janet Yellen will decline to name China as a currency manipulator in her first semi-annual foreign exchange report, according to people familiar with the matter, a move that allows the United States to sidestep a fresh clash with Beijing.

The report, which is not yet finalised, is due on Thursday, although it is unclear when the department will release it. During the Trump era, the US Treasury Department was accused of politicising the report after it abruptly designated China a manipulator in mid-2019 outside its usual release schedule, only to lift the label five months later to win concessions in a trade deal.

A US Treasury spokeswoman declined to comment. The offshore yuan extended its intraday gain slightly following the news, strengthening around 0.2 per cent to touch a new high for the day of around 6.5462 per US dollar.

Yellen’s team has also discussed the possibility of reversing a 2019 Trump administration move to lower thresholds for determining whether an economy is manipulating its currency for competitive advantage, the people said on condition of anonymity because the talks are private. A rollback could lead to the agency cutting the number of nations it scrutinises by nearly half, they said.

The Biden administration is looking to hold China accountable for what it says are unfair trade practices, along with other issues such as human-rights violations, while reviewing what to do with tariffs slapped on billions of dollars of Chinese goods by former president Donald Trump.