PEKING (dpa-AFX) - The Treasury Department on Friday once again said it would not list China as a currency manipulator, despite widespread outcry from congressional and other political leaders.
The department's semi-annual report states although China has not followed through on commitments to move more rapidly to a more market-determined exchange rate system, recent promises to do so provide the needed assurances to the federal government.
Based on the RMB's appreciation against the dollar since mid-2010, China's balance of payments adjustment and commitments it will 'more rapidly to a more market-determined exchange rate system, Treasury has concluded that the standards identified in Section 3004 of the Act during the period covered in this Report have not been met with respect to China,' the report stated.
The Omnibus Trade and Competitiveness Act of 1988 tasks Treasury to undertake this report. Section 3004 requires the department to determine if any country with global current account and significant bilateral trade surpluses with the U.S. is found to be manipulating the rate of exchange between their currency and the dollar for the purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.
If this is found to be true, expedited negotiations, through the IMF or bilaterally, are to be initiated, the act says. Neither the previous or current administration has deemed China to be a currency manipulator under this act despite bipartisan congressional urging for them to do so.
'The administration continues to let China get away with flouting trade rules just for the sake of diplomacy,' Rules Committee Chairman Senator Chuck Schumer (D-NY) said in a statement Friday. 'Calling out China as a manipulator may be awkward, but it is time to take off the kid gloves.'
'With the administration continuing to balk on this, it's up to Congress to act. The Senate has passed bipartisan legislation to confront China and stand up for American workers, and Speaker Boehner needs to stop sitting on it and give it a vote,' Schumer added.
Republican presumptive presidential nominee Mitt Romney has also made China currency manipulation a key part of his campaign. Just this week, he stated confronting their yuan pegging would be a 'day one' issue under a Romney presidency.
In addition to reducing the deficit and loosening regulatory policies, the Romney ad released last week in Ohio, Iowa, Virginia and North Carolina said he would 'make China play by the rules.' Romney's constant focus on the economy, tying it to all domestic and foreign policies, is working well for him in polls which show him drawing even with the president on fiscal issues.
The American economy, and the specific issue of China's currency practices, will be a major issue during the general election this year and the Obama administration's decision to not list the Chinese under Section 3004 could hurt them in six months time.
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