WASHINGTON (AP) - The Trump administration declined Friday to label China a currency manipulator despite President Donald Trump's insistent pledge during the election campaign that he would do so as soon as he took office.
The United States has stopped short of branding China a currency manipulator, but urged the world's second-biggest economy to let the yuan rise with market forces and embrace more trade. Because of these actions, many economists and investors had already suspected that China wouldn't meet Treasury's criteria.
"The US can not and will not bear the burden of an global trading system that unfairly disadvantages our exports and unfairly advantages the exports of our trading partners through artificially distorted exchange rates", it said. The latest report's censure of China and other countries-including South Korea and Germany-could be used in the future as a pretext for new tariffs.
Economists agree that China doesn't now merit the label of currency manipulator, and has not engaged in the practice for several years.
In a statement, the Treasury department said the findings and recommendations of the report are meant to combat "potentially unfair currency practices" and support the growth of free and fair trade.
Previous administrations have used three factors to determine if a country is a currency manipulator - a trade surplus with the US of more than $20 billion; a current-account surplus totaling more than 3% of its gross domestic product; and repeatedly devaluing its currency by buying foreign assets that equals to 2% of output a year.
US 100 dollar banknotes and Chinese 100 yuan banknotes are seen in this picture illustration in Beijing, China, January 21, 2016.
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Instead, the first currency review of the Trump administration singled out China and five other countries as needing to be monitored for their currency practices.
Before the summit, Trump tweeted that the meeting would be a "very hard one" due to China's large trade deficit and the American jobs it had cost.
In the interview with The Wall Street Journal, Trump said he had offered the Chinese better trade terms in exchange for their help on addressing the nuclear threat from North Korea.
The report comes one week after mostly positive talks between Trump and China President Xi Jinping.
Also, Seoul's financial authorities intervened on the foreign exchange market throughout 2016 in order to ease a sharp depreciation of the local currency, selling $6.6 billion over the on-year period.
"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. The Treasury Department continued to call for reforms to the labor market that would improve Japanese workers' productivity, along with fiscal and monetary support for the Japanese economy.