US Treasury again declines to name China as currency manipulator

WASHINGTON - The US Treasury Department has again said that China cannot be ruled as a currency manipulator, but that the pace of RMB's appreciation has been insufficient. According to the latest US Treasury report, the yuan appreciated by 2.9% against the US dollar in 2013, and China's current account surplus declined to 2.1% of GDP in 2013, down from 2.3% of GDP in 2012 and from a peak of more than 10% in 2007.

The US Treasury report voices concerns over recent volatility of yuan, saying "the recent depreciation underlines the importance of a significant increase in the transparency of China's actions in the foreign exchange market”.

Yi Gang, Deputy Governor of the People's Bank of China, said last week in Washington that recent depreciation in the value of Chinese currency is within a normal range and that China is still on track toward a more market-oriented exchange rate regime. He expects the yuan's flexibility to increase, with two-way fluctuation instead of one way appreciation.

China’s leadership has expressed a strong desire for exchange rate reform, and the Third Plenum underlined a goal to perfect the market-based yuan exchange rate mechanism.

Currency manipulation has been a point of contention in relations between the US and China, but the US has declined to formally brand China as a currency manipulator for 11 straight semi-annual reports to Congress, saying that there will be more progress through negotiation rather than confrontation.