WASHINGTON (AP) — The Obama administration on Tuesday declined to label China a currency manipulator after seeing recent increases in the value of the renminbi compared with the dollar.
The decision angered some manufacturing groups, which have accused China of artificially holding down the value of its currency, the renminbi, to gain trade advantages. A cheaper renminbi makes Chinese goods less expensive when they are shipped to the United States. It also makes American goods more expensive in China. Both could increase America’s trade deficit with China, which is on pace to reach a record high this year.
The Treasury Department said the renminbi had appreciated 12 percent against the dollar in the last 18 months, after adjusting for inflation. In addition, the department said in a semiannual report that China promised at two high-level meetings last month to make the renminbi’s exchange rate more flexible.
Still, the Chinese currency is “substantially undervalued” and its appreciation “is insufficient and more progress is needed,” the report noted. The Treasury Department will “press for policy changes that yield greater exchange rate flexibility” and “level the playing field.”
The currency report evaluates exchange rate policies of all major American trading partners. It was scheduled to be released on Oct. 15, but the administration delayed its release until after last month’s meetings.
Mitt Romney, a former Massachusetts governor and a leading candidate for the Republican presidential nomination, has criticized the administration for refusing to cite China for manipulating its currency. Mr. Romney said in October that, if elected, he would take that step on his first day in office. That could lead to trade sanctions against China.
Scott N. Paul, executive director of the Alliance for American Manufacturing, also questioned the decision. “I’m disappointed that President Obama has now formally refused six times to cite China for its currency manipulation, a practice which has contributed to the loss of hundreds of thousands of American manufacturing jobs,” Mr. Paul said.
China has recently taken action that could result in the renminbi appreciating without prodding from the United States.
China and Japan agreed this week to accept the others’ currency when trading. Currently, they each convert their currency to dollars. That has made trade between the two Asian economic giants more expensive.
Article source: http://www.nytimes.com/2011/12/28/business/global/china-isnt-manipulating-currency-us-says.html?partner=rss&emc=rss
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