The United States took the rare step on Monday of formally labeling China a currency manipulator, as trade relations between the two countries continued to spiral downward after President Donald Trump’s decision last week to impose additional tariffs on Chinese goods.
“In recent days, China has taken concrete steps to devalue its currency, while maintaining substantial foreign exchange reserves despite active use of such tools in the past,” the Treasury Department said in a statement that followed the People’s Bank of China’s decision to let its currency, the renminbi, fall to the lowest level in more than a decade.
U.S. Treasury Secretary Steven Mnuchin made the determination acting “under the auspices of President Trump,” the department said. Mnuchin will now “engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China’s latest actions,” it added.
Previous administrations have been loath to label China a currency manipulator, arguing it was better to work with other countries to put diplomatic pressure on Beijing. The last time Treasury designated any country as a currency manipulator was in the early 1990s, when China was named.
During the 2016 presidential campaign, Trump promised to formally label China as a currency manipulator on his first day in office. But he declined to do that, reflecting the prevailing view at the time that Beijing was not devaluing its currency for an unfair trade advantage.
Since then, the Treasury Department has kept China on a currency watch list in five semi-annual reports issued under the Trump administration, but had not formally labeled it a currency manipulator. The next report is due on Oct. 15, but Mnuchin acted ahead of schedule.
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