The United States called China a currency manipulator in August, as part of its trade war with the nation. (ABC News: Jarrod Fankhauser)
The Trump administration is abandoning its designation of China as a currency handler before Wednesday’s signing of phase one of the US-China trade agreement.
- The United States designated China as a currency handler in August, for the first time in a quarter of a century.
- U.S. Treasury Secretary Steven Mnuchin says the designation will be removed as part of a phase one trade agreement.
- China and USA UU. They will sign the first phase agreement in Washington on Wednesday
The preliminary agreement that the two parties will sign this week includes a section aimed at preventing China from manipulating its currency for commercial advantages.
The removal of the designation comes five months after the Trump administration qualified China as a currency manipulator, the first time a country has received that name since 1994, during the Clinton administration.
By removing China from its blacklist of currencies, the Treasury Department does name China as one of the 10 countries that need to be included in a watch list, which means that its exchange practices will be closely monitored.
In addition to China, the countries on that list are Germany, Ireland, Italy, Japan, South Korea, Malaysia, Singapore, Switzerland and Vietnam.
Treasury Secretary Steven Mnuchin said the administration had abandoned China’s designation as a currency handler due to the commitments in the phase one trade agreement that President Donald Trump will sign with China on Wednesday at the White House.
“China has made mandatory commitments to refrain from competitive devaluation, while promoting transparency and accountability,” Mnuchin said in a statement accompanying the currency report.
‘A lot of show and very few results’
However, some critics of China’s business practices criticized the administration’s decision.
“China is a currency manipulator, that’s a fact,” said Senator Chuck Schumer, the Democratic leader in the Senate.
“When it comes to the president’s position on China, Americans are getting a lot of show and very few results.”
The Treasury Department must inform Congress twice a year, in April and October, about whether any country is manipulating its currencies to obtain unfair trade advantages against US companies and workers.
When a country manipulates its currency to keep it artificially low, its products become relatively less expensive abroad, and the products of other countries become relatively more expensive.
The new report is technically delayed three months, apparently because the Trump administration had delayed its launch until it made China’s phase one commitments.
The initial decision to qualify China as a manipulator came in a surprise announcement in August, reversing a Treasury finding in May that no country was manipulating its currency.
The United States had not put any country on the blacklist of manipulation since the Clinton administration rated China as a manipulator 26 years ago.
Trump had long accused China of manipulating its currency, although most independent experts concluded that Beijing had stopped doing so years ago.
The designation was largely symbolic. It forced the United States to enter into negotiations to solve the currency problem that could ultimately lead to the imposition of economic sanctions such as higher tariffs on Chinese products, something that the Trump administration was already doing in its trade war of eye for eye with China.
The trade agreement will be signed on Wednesday
Trump plans to sign the phase one trade agreement on Wednesday, after which administration officials said the text of the agreement would be made public.
In a fact sheet on the agreement published on December 13, the administration said the agreement would address “unfair monetary practices by demanding high-level commitments to refrain from competitive devaluations and the orientation of exchange rates.”
The signing of the phase one agreement culminates with two years of commercial conflict between the two nations, during which punitive tariffs were imposed on tens of billions of dollars in products from each nation.
The battle increased uncertainty and caused companies to withdraw their investments, which slowed global growth.
It also stirred the financial markets with the fear that the trade war could be severe enough to push the US economy into a recession.
agreements and treaties,