WASHINGTON -- China is not manipulating its currency to gain unfair trade advantage, the US Treasury Department said Wednesday in a semiannual report to Congress.
A handfull of hundred-yuan notes at a bank in Beijing. The US government declined to name China a currency manipulator. [Agencies]
"Treasury concluded that neither China nor any other major trading partner of the US met the requirements for designation" as a manipulator of their currency, the report said.
However, the report said the Chinese yuan remains severely undervalued against the US dollar, claiming the recent movement of the yuan had been "too limited and modest."
The Treasury issues the report twice a year according to a 1988 law, which requires the department to analyze trading partners' foreign exchange policies and determine whether currency manipulation to gain unfair trade advantage is occurring.
Under the law, economic sanctions can be imposed on countries found in violation.
The report acknowledged that the yuan, also known as the renminbi, appreciated against the dollar by 12.1 percent since a new currency regime was imposed in July 2005 that allowed it to trade in a wider range.
The Chinese currency rose by 2.5 percent in the first half of 2007 and another 3.2 percent in the second half through December 11. Against a broader range of currencies, the gain has been 3.8 percent since 2005.