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U.S. Treasury Declines to Name China Currency Manipulator

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China isn’t a currency manipulator under U.S. law, though the yuan “remains significantly undervalued” and needs to rise further, the Treasury Department said.

China “has substantially reduced the level of official intervention in exchange markets since the third quarter of 2011,” the Treasury said in a statement accompanying its semi- annual currency report to Congress yesterday. The yuan has gained 9.3 percent in nominal terms and 12.6 percent in real terms against the dollar since June 2010, the Treasury said.

“It appears that the strategy of the last two administrations to use diplomacy rather than confrontation in dealing with the yuan’s value is having some positive results,” William Reinsch, president of the National Foreign Trade Council, a Washington-based business group, said in an e-mail after the report. “There is clearly room for further appreciation, however.”

In declining to brand China a manipulator, the Treasury cited the reduced intervention and “steps to liberalize controls on capital movements, as part of a broader plan to move to a more flexible exchange-rate regime.” The U.S. hasn’t designated another nation since 1994, when it named China.

Critics of China’s exchange-rate policies, including former Republican presidential candidate Mitt Romney, say the nation deliberately suppresses the value of its currency, making its goods cheaper in overseas markets and costing jobs in the U.S.

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Boehner refuses to go along with Romney’s plan to confront Chinese currency manipulation

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The top Republican in the U.S. Congress highlighted a policy rift Thursday with his party’s presidential hopeful when he reiterated his opposition to using legislation to press China to revalue its currency.

Staking out a position in contrast to the hawkish views of Mitt Romney, House of Representatives Speaker John Boehner, who has opposed repeated efforts in recent years to pass laws that would put tariffs on Chinese goods unless it allowed the yuan to appreciate, told reporters he still felt the same way.

“There’s a way to deal with this problem and a way not to deal with it. Congress passing a law outlining stringent requirements for dealing with the Chinese and the value of the currency, I think is inappropriate,” Boehner said.

Earlier this week, Lanhee Chen, the Romney campaign policy director, issued a blistering statement in which she said President Barack Obama, a Democrat, had “lost all credibility on China and trade” for among many things, failing to label China a currency manipulator despite his 2008 campaign pledge to do so.

“What message does it send the Chinese when President Obama refuses to even formally acknowledge that they are in fact manipulating their currency?” Chen wrote.

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Photo credit: jimmiehomeschoolmom