Treasury Dept. Says China Moving to Better Exchange Rates
The Treasury Department again declined to declare China a currency manipulator, despite finding continued undervaluation of the renmenbi, in its latest semiannual report on international exchange rates and their effect on trade. Because of China's actions to appreciate its currency and move to a more market determined exchange rate, the RMB has appreciated by 9.3 percent in nominal terms and 12.6 percent in real terms against the dollar since June 2010, according to the report. China's trade and current account surpluses both have fallen to 2.6 percent of GDP from peaks of 8.8 and 10.1 percent of GDP, respectively, the report said.
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Treasury said Chinese authorities have substantially reduced the level of official intervention in exchange markets since the third quarter of 2011, and China has taken a series of steps to liberalize controls on capital movements, as part of a broader plan to move to a more flexible exchange rate regime. But it said the available evidence suggests the RMB remains significantly undervalued, and further appreciation of the RMB against the dollar and other major currencies is warranted.
"The Treasury Department once again made the right call on China's currency policy in its report to Congress," said US-China Business Council President John Frisbie in response. "Labeling China a currency 'manipulator' would do little to help us reach the goal of a fully convertible currency and market-driven exchange rate for China. ... The exchange rate has little to do with the US trade balance or employment, as we have said for some time. We need to move on to more important issues with China, such as removing market access barriers and improving intellectual property protection."