WASHINGTON: The US Treasury on Friday cleared China of keeping the yuan cheap for trade advantages, amid accusations by Republican presidential candidate Donald Trump that it manipulates the currency.
In a semi-annual review mandated by Congress over fears US trade rivals manipulate their currencies to boost exports, the Treasury said that although the yuan had fallen in the past year, this decline was driven by market pressures.
Indeed, it said the yuan, also called the renminbi (RMB), could have fallen more had Beijing not acted to avoid that.
“China’s intervention in foreign exchange markets has sought to prevent a rapid RMB depreciation that would have had negative consequences for the Chinese and global economies,” the Treasury said in a report.
But it added that China needs to continue loosening its exchange rate policies and be more transparent about the market.
“It is important for China to continue market-oriented exchange rate reform, allowing for two-way flexibility of the RMB,” it said.
In his fight against Hillary Clinton for the White House, Trump has repeatedly accused China of keeping the yuan undervalued so as to promote its exports and make imports from the US more costly.
He has threatened to erect trade barriers to Chinese products if elected president, and his official policy platform includes instructing the Treasury to label China a currency manipulator, which would lead to trade sanctions.
“We don’t know what we’re doing when it comes to devaluations and all of these countries all over the world, especially China,” Trump said in a debate with Clinton in September.
“They’re the best, the best ever at it. What they’re doing to us is a very, very sad thing.”