The Treasury also warned that it will scrutinize China's trade and currency practices very closely and called for faster opening of China's economy to United States goods and services and a shift away from exports to more domestic consumption.
China and Germany are not manipulating the value of their currencies to gain an unfair trade advantage, but both should do more to reduce their large trade surpluses with the United States, the Treasury Department said Friday. The provisions of the Customs Bill provide the USA government with new monitoring tools and measures to address unfair currency practices.
"Treasury also places high importance on greater transparency of China's exchange rate and reserve management operations and goals", said the report. He promised to label the country a currency manipulator on day one of his presidency.
Trump's dramatic reversal on China's currency follows a cordial meeting between the president and Chinese leader Xi Jinping at Mar-a-Lago on April 6 and 7.
Trump's policy reversal on China sends a signal to global finance chiefs ahead of next week's meeting in Washington, D.C., that Trump could soften the aggressive trade positions he staked out during his campaign.
With (Other OTC: WWTH - news) a trade surplus in goods with the United States of $347 billion a year ago, and continued policies that restrict free trade and foreign investment, "Treasury will be scrutinizing China's trade and currency practices very closely".
Trump did say he thought the dollar was "getting too strong" - a comment that sent the USA currency falling, though it subsequently rebounded.
Before the summit, Trump tweeted that the meeting would be a "very hard one" due to China's large trade deficit and the American jobs it had cost.
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No country met the three criteria to be labelled a currency manipulator in the second half of 2016.
The Central Bank said the publication of the US report was unlikely to cause any ripples in the foreign exchange market because its conclusions on Taiwan had been expected.
The International Monetary Fund declared the RMB as no longer undervalued in 2015.
All six countries had been named by Obama's Treasury Department as well.
"China will need to demonstrate that its lack of intervention to resist appreciation over the last three years represents a durable policy shift by letting the RMB (yuan) rise with market forces once appreciation pressures resume", the report said. All told, it put six trading partners on watch, along with Japan, Korea, Switzerland and Taiwan.
The US had earlier listed China, South Korea, Japan, Taiwan, Germany and Switzerland as foreign-exchange manipulators and had kept then on its monitoring list - China by virtue of a massive trade surplus with the United States.
The decision was expected after President Donald Trump this week reversed himself and said China was not a currency manipulator.
This would include more "flexible" government spending policies, and continued reforms to boost the labor market and increase productivity of the Japanese economy.