New US Treasury report does not label China as a currency manipulator
- In the first foreign exchange report of the Biden administration, Treasury Secretary Janet Yellen keeps China on a watch list for its practices
- Taiwan is on the watch list but was not designated as a currency manipulator
China remained on the watch list over its currency practices. The report, which is typically issued to the US Congress twice a year, said: “China’s failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate mechanism and the activities of state-owned banks warrant close monitoring of renminbi developments.”
Treasury Secretary Janet Yellen said at her confirmation hearing in January that she would work to fulfil Biden’s promise to “oppose any and all attempts by foreign countries to artificially manipulate currency values to gain an unfair advantage in trade”.
“By not labelling China, it is not necessarily an olive branch to Beijing because it appears from news reports that the Biden administration is still going to push a harder agenda with China, but I do think that they didn’t want to antagonise right out of the gate,” said Brady Mills, a lawyer who focuses on unfair trade investigations at the firm of Morris, Manning & Martin in Washington.
“And also the [yuan] has appreciated significantly in 2020 against the dollar, so I think that’s also an important factor that they took into account.”
The yuan has strengthened 8 per cent against the US dollar in the past year.
The currency report is designed to call out manipulative behaviour of major US trading partners by monitoring three areas: government intervention in the foreign exchange market, current account surplus and bilateral trade surplus.