Washington, May 29: The US Treasury expanded the number of countries subject to scrutiny in a semi-annual report released Tuesday, but again found that neither China nor any other trading partners was manipulating its currency.
Treasury urged the Asian giant to avoid allowing the renminbi (RMB) to weaken persistently — which would give its products more competitive advantage.
Germany remained on the US “monitoring list” due to its large trade surplus, as did Japan and South Korea, indicating they “merit close attention to their currency practices.”
Despite a bitter trade war with China focused on bringing down the US trade deficit, Treasury held back from escalating the fight further.
Tensions between the two economic superpowers have risen in recent weeks after President Donald Trump accused Beijing of reneging on its commitments, and with a US crackdown on Chinese telecom giant Huawei.
Treasury Secretary Steven Mnuchin said his agency “takes seriously any potentially unfair currency practices,” and “is working vigorously to achieve stronger growth and to ensure that trade expands in a way that helps US workers and firms and protects them from unfair foreign trade practices.”
Treasury said the report concluded that “direct intervention by the People's Bank of China in the last year has been limited.”
However, the US “continues to urge China to take the necessary steps to avoid a persistently weak currency.”
– Expanding scrutiny –
The closely watched report broadened the field of its scrutiny for potential exchange rate manipulation, since a weak currency makes US products less competitive and could undermine Washington's efforts to cut a soaring global trade imbalance.
Mnuchin said Treasury “is expanding the number of US trading partners it reviews to make currency practices fairer and more transparent.”
With the newly expanded list, Treasury put nine trading partners on the monitoring list, including Ireland, Italy, Malaysia, Singapore and Vietnam.
Beginning with this report, the Treasury is assessing all US trading partners with annual trade surpluses in goods of more than $40 billion.
Based on trade in 2018, that standard covered 21 countries with nearly $3.5 trillion in goods trade with the United States, according to the report.