The Obama administration on Tuesday said in a congressionally mandated semi-annual report that China did not manipulate its currency, but Chinese currency still remained undervalued. [File Photo]
The Obama administration on Tuesday said in a congressionally mandated semi-annual report that China did not manipulate its currency, but Chinese currency still remained undervalued.
The report outlined actions taken by China to appreciate its currency and move to a more market determined exchange rate. The renminbi (RMB) has appreciated by 9.3 percent on a nominal basis and 12.6 percent in inflation-adjusted terms against the U.S. dollar since June 2010, said the U.S. Treasury Department.
China's trade and current account surpluses have both fallen to 2.6 percent of gross domestic product (GDP) from peaks of 8.8 and 10.1 percent respectively of GDP, noted the Report to Congress on International Economic and Exchange Rate Policies of major U.S. trading partners including China, Japan and the eurozone.
The Chinese government had "substantially" reduced its intervention in foreign exchange markets since the third quarter of 2011 and loosened capital controls, the Treasury said in the report.
Nonetheless, the department added, the available evidence suggested the RMB remained significantly undervalued, and further appreciation of the RMB against the U.S. dollar and other major currencies was warranted.
During this year's US presidential election campaign, Republican candidate Mitt Romney accused President Barack Obama of adopting too soft a trade stance toward China, vowing to label the nation a "currency manipulator" if he won the election.
In a Semi-Annual Report to Congress on International Economic and Exchange Rate Policies, which was published on May 25, 2012, the US Treasury Department said China has not met standards of a currency manipulator, and it also highlighted the need for greater exchange rate flexibility, including China and some other major economies.