US presses China to let yuan strengthen, avoids ‘currency manipulator’ label

The United States has urged China to allow the yuan to appreciate, accusing Beijing of a lack of transparency and describing the currency as “substantially undervalued”.

“It is important that the Chinese authorities allow the RMB exchange rate to strengthen in a timely and orderly manner in line with market pressure and macroeconomic fundamentals,” the US Treasury said in a report released on Thursday.

China’s exchange-rate policies stood out among major US trading partners for their “relative lack of transparency”, it added, though it stopped short of designating Beijing a currency manipulator.

The report, the latest semi-annual foreign currency review by the US Treasury, came amid Washington’s long-standing concern that Beijing may intentionally undervalue the yuan. It last labelled China a currency manipulator in 2019, during US President Donald Trump’s first term.

“This relative lack of transparency will not preclude [the] Treasury from designating China if available evidence suggests that it is intervening through formal or informal channels to resist RMB appreciation in the future,” the report said.

In contrast to the sharp depreciation seen during Trump’s first term – which fuelled speculation that Beijing had allowed the yuan to weaken to offset tariffs – the currency has trended stronger in “trade war 2.0”, despite a brief dip in early April when Washington announced sweeping “reciprocal tariffs” on nearly all its trading partners.

South China Morning Post