U.S. Treasury Department Report Keeps China On Currency Manipulation Monitoring List

The United States Department of the Treasury issued its semiannual “Report to Congress on Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States.” In this report, which is mandated by law, the Treasury Department examines the policies of major U.S. trading partners that, together, comprise about 78 percent of U.S. foreign trade in goods and services.

The report is also where the department names countries that U.S. government officials believe are manipulating their currency. The Treasury Department said it had concluded that “no major U.S. trading partner manipulated the rate of exchange between its currency and the U.S. dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade during the four quarters through December 2023.”

The department uses three criteria to make this assessment. They are that a country has:

• A “significant” bilateral trade surplus with the United States, which means a goods and services trade surplus that is at least $15 billion;
• A material current account surplus that is at least three percent of gross domestic product (GDP); and
• Carried out persistent, one-sided intervention where net purchases of foreign currency are conducted repeatedly, in at least eight out of the last 12 months, and that these net purchases totaled at least two percent of an economy’s GDP over a 12-month period.

While no countries were accused on manipulating their currencies, the Treasury Department placed seven economies on its “monitoring list” of trading partners that merit close attention to their currency practices and macroeconomic policies. These countries were China, Germany, Japan, Malaysia, Singapore, Taiwan, and Vietnam.

The report also reiterated the Biden administration’s call for increased transparency from the Chinese government when it comes to currency practices and macroeconomic policies. It said China’s failure to publish foreign exchange intervention and broader lack of transparency around key features of its exchange rate policy make China an outlier among major economies.

Read the Treasury Department’s press statement and find its full report here.