WASHINGTON, July 9 (Xinhua) -- The U.S. Treasury Department on Thursday declined to label China a currency manipulator.
"Treasury has concluded that no major trading partner of the United States met the standards identified in Section 3004 of the Act," the department said in its biannual report sent to Congress on international economic and exchange rate policies.
The Omnibus Trade and Competitiveness Act of 1988 requires the Treasury Secretary to provide reports on "whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade."
Treasury Secretary Tim Geithner said Washington will closely and regularly monitor the appreciation of the renminbi or yuan, China's currency. "What matters is how far and how fast the renminbi appreciates," he said.
The Treasury Department's decision displeased U.S. lawmakers, some of whom made fresh calls for stiffer tariffs on Chinese goods unless China took significant steps to appreciate its currency.
The Capitol Hill has been aggressive in pushing China on the currency issue as China's trade and currency policies now have a larger impact on the United State than before.
But what is more important is that the U.S. policy makers need a scapegoat to divert public attention from serious domestic problems -- for example, the high unemployment rate that stubbornly remains over 9 percent despite months of moderate growth.
As a Wall Street Journal article published on June 20 said, "As for the U.S., the (renminbi) yuan has become a convenient scapegoat for Washington's policy mistakes."
In contrast with the lawmakers, the Obama administration pursues a more pragmatic approach toward the currency issue.
Geithner has said on many occasions that "China is a sovereign country, and China is going to have to decide its exchange rate."
One reason the Treasury Department opted not to declare China a currency manipulator is that China announced on June 19 a decision to proceed further with the reform of its exchange rate regime to enhance the flexibility of the yuan.
The Chinese yuan has risen about 0.8 percent against the dollar since the June announcement.
The report welcomed China's exchange rate policy shift, calling it a "significant development."
The report also gave a comparatively objective evaluation about China's role in the current global economic recovery.
It said China was a significant source of economic support in 2009, generating a 13-percent increase in domestic demand that contributed 1.6 percentage points to global growth at a time when total world demand declined 0.6 percent.
Moreover, at a time when a sustained global economic recovery still faces grave uncertainty, the Obama administration is reluctant to strain its trade ties with China, an important export market for U.S. goods.
According to the Treasury Department report, in the second half of 2009, U.S. exports to China increased by 15 percent on a year-on-year basis, while U.S. exports to the rest of world fell by 13 percent.
As Geithner said, the U.S. "will continue to work toward expanded U.S. export opportunities in China that support employment in the United States."