Trump admin. declines to brand China a currency manipulator
- Author: Todd Kelly Apr 17, 2017,
Apr 17, 2017, 0:24
Asian equities evaded currency manipulator label in the latest report by U.S. Treasury, but still remain wary of possible trade frictions, as U.S. President, Donald Trump maintains his administration will seek to address trade imbalances.
During the 2016 campaign, the then-Republican presidential nominee often said that China was manipulating its currency to boost exports, a policy that cost American manufacturing jobs.
A report from the US Treasury Department on Friday said China was not a currency manipulator, but singled out China and give other countries as needing to be monitored over their currency practices. "An essential component of this Administration's strategy is to ensure that American workers and companies face a level playing field when competing internationally", said Treasury Secretary Steven Mnuchin.
The Treasury report was being awaited with great interest until Wednesday, when Trump offered a preview in an interview with The Wall Street Journal. He had promised to label the country a currency manipulator on "Day One" of his presidency.
The US runs a substantial overall trade surplus in services like intellectual property licenses, travel-related services, financial and insurance services - it ran to $248 billion in 2016 - and a very large trade deficit in goods, amounting to $750 billion previous year.
Over the last decade, China's effective exchange rate has appreciated more than any other major currency, rising a total of more than 40 percent, said David Dollar, a senior fellow at the Brookings Institution.
"China and Germany have been included in the list of the countries, whose currency manipulations will be observed by analysts of the TreasuryDepartment", they said. President Trump says one thing, Nikki Haley says another.
But the president's tweet indicated an openness to US intervention if China doesn't deal with the nuclear threat posed by the isolated country.
Days after Trump's meeting with President Xi Jinping, Trump tweeted that Beijing would get a better trade deal with Washington if it helped resolve the USA problem with Pyongyang.
President Donald Trump suggested Sunday that his about-face on labeling China a currency manipulator was a strategic move meant to entice the country's cooperation on North Korea.
But 'if they're unable to do so, the U.S., with its allies, will, ' he tweeted Thursday morning. The administration has also put forward a draft proposal on renegotiating the North American Free Trade Agreement with Mexico and Canada that dropped some of the tougher positions Trump took during the campaign.
However, the U.S. Treasury States did not name Taiwan as a currency manipulation nation in the report.
It said it will scrutinise China's trade and currency practices very closely, especially in light of the extremely sizable bilateral trade surplus that China has with the US.
Designating a country as a currency manipulator doesn't immediately trigger any penalties, but it is seen by other governments as a provocation.