U.S. says China not currency manipulator

Some U.S. politicians have argued that China has gained an unfair competitive edge in global markets by keeping the yuan artificially low to boost exports.

But the Treasury again shied away from taking the more serious step of labeling China a currency manipulator, saying the statutes covering such a designation "have not been met with respect to China."

The value of the yuan, which Beijing manages closely, has risen by 4 percent against the dollar this year and 7.7 percent since China dropped a firm peg against the greenback in June 2010. The appreciation, however, has been too slow in the eyes of the United States.

"The movement of the (yuan) to date is insufficient," the Treasury said in a statement following the release of its semi-annual report to Congress on international economic and exchange rate policies.

"Treasury will closely monitor the pace of appreciation and press for policy changes that yield greater exchange rate flexibility, a level playing field, and a sustained shift to domestic demand-led growth."

The Peterson Institute for International Economics recently estimated the yuan was undervalued by 24 percent against the dollar, down from 28 percent earlier in the year. It attributed the change to both Beijing's policy of gradual currency appreciation and higher Chinese inflation.

Treasury Secretary Timothy Geithner has said the law that requires the administration to determine whether U.S. trade partners are deliberately undervaluing their currencies is a poor tool to push Beijing on the yuan.

Instead, the United States has tried to use international economic fora, such as the Group of 20 leading nations and the International Monetary Fund, to ramp up pressure on Beijing to move more quickly to a more-flexible currency.

The Treasury Department has not labeled country a currency manipulator since July 1994, when it cited China. A designation would require the United States to step up negotiations with Beijing on the yuan's value.

(Editing by Neil Stempleman and Leslie Adler)

Source: http://www.ibtimes.com/articles/20111227/usays-china-not-currency-manipulator.htm

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