WASHINGTON — The Trump administration on Tuesday declined to label China as a currency manipulator despite President Trump’s repeated complaint that Beijing has weakened the renminbi as a way to take advantage of the United States on trade.
The decision not to formally accuse China of manipulating its currency could avoid further escalating tensions between Washington and Beijing, which have grown heated following a breakdown in trade negotiations earlier this month.
China continues to be on Treasury’s watchlist along with the “currency practices” of Germany, Ireland, Italy, Japan, Korea, Malaysia, Singapore, and Vietnam. And the report continued to raise concerns about China’s activity in managing its currency.
Treasury said that it has “significant concerns” about China’s currency practices and criticized the Chinese government for lacking transparency in how it manages foreign exchange. It noted that the renminbi has fallen by 8 percent in the last year and that China’s bilateral trade surplus in goods with the United States grew to $419 billion as of the end of 2018.
“The outsized magnitude of the bilateral deficit is a result of China’s persistent and widespread use of non-tariff barriers, nonmarket mechanisms, state subsidies, and other discriminatory measures that are increasingly distorting China’s trading and investment relationships,” the report said. “These practices tend to limit Chinese demand and market access for imported goods and services, leading to a wider trade surplus.”
The report comes as the United States and China are locked in a protracted trade war following a breakdown in trade negotiations earlier this month. The United States raised tariff rates on $200 billion worth of Chinese imports and is considering imposing tariffs on another $300 billion. China has vowed to hit back with tariffs or other punitive measures of its own.