The administration's first report to Congress on foreign exchange policies of United States trading partners continues the stance of the Obama administration, putting those and four other countries on a watch list, though using a much tougher tone. Treasury finds that six major trading partners warrant being placed on the Monitoring List for special attention: "China, Germany, Japan, Korea, Switzerland and Taiwan", it said.
On March 14, 2017, semi-annual U.S. Treasury currency report was released, which doesn't indicate any major trading partner as currency manipulator, although it seems to leave open the option for action in future.
"Expanding trade in a way that is freer and fairer for all Americans requires that other economies avoid unfair currency practices, and we will continue to monitor this carefully", The Hill quoted Treasury Secretary Steven Mnuchin as saying in a statement.
Trump repeatedly pledged in his election campaign to name China as a currency manipulator on his first day in office, but did not do so.
With a trade surplus in goods with the United States of US$347 billion (RM1.53 trillion) previous year, and continued policies that restrict free trade, "Treasury will be scrutinising China's trade and currency practices very closely".
Trump's dramatic reversal on China's currency follows a cordial meeting between the president and Chinese leader Xi Jinping at Mar-a-Lago on April 6 and 7. The reversal by the Treasury department was one of the aslmost half-a-dozen instances when Donald Trump or his administration have gone back on his poll campaign promises.
"I think the United States made a decision to forego (labeling China a currency manipulator) this time because it wants China's cooperation on North Korea", said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.
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"We have no intention to stimulate exports by devaluing the currency, and there is no basis for a continuous devaluation of the renminbi", ministry spokesman Lu Kang said at a regular news conference.
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.
"When the President fails to label them a currency manipulator, he gives them a green light to steal our jobs and wealth time and time again", he said. While China had been intervening to prevent a depreciation of the yuan, its selling of foreign currency reserves abated early this year, Treasury said.
"China has clearly embarked on market-oriented exchange rate reform, with the yuan's daily trading band already expanded to 3 per cent from 0.3 per cent", Zhou said.
The report uses three criteria to determine which of its trading partners will be named as a currency manipulator nation.
"Solve the problem in North Korea", Trump said, noting such a solution would be "worth having" a trade deficit with China.
Economy is in increasingly good health and Wall Street has hit successive records that were boosted by president's promises of cutting taxes, spending on infrastructure and slashing regulations.