US wants China to let yuan rise, improve market access

The United States has desisted pressure to brand China and other Asian economies as trade manipulators, even as the Trump administration urged the world's second-largest economy to let the yuan rise with market forces to facilitate more imports into the economy.

In the first foreign-currency report released by the Treasury Department on Friday, the Donald Trump administration had acknowledged that no major trading partner was manipulating currency for an unfair trade advantage.

This, however, has not reduced trade friction as President Donald Trump maintains his administration will seek to address trade imbalances.

Trump has said some US trading partners, particularly China, manipulated their currency, but has since backed off that claim and acknowledged that China had not weakened the yuan to make its exports cheaper.

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.

''China currently has an extremely large and persistent bilateral trade surplus with the United States, which underscores the need for further opening of the Chinese economy to American goods and services,'' as well as quicker reforms to boost household consumption, according to the Treasury report.

China, Japan, South Korea and Taiwan remained on a list for special monitoring of currency practices, China by virtue of a massive trade surplus with the United States.

The focus now shifts to fixing trade imbalances, especially with China and Japan.

The semi-annual US Treasury currency report released on Friday did not name any major trading partner as a currency manipulator, although it seemed to leave open the option for action in the future.

Trump declared on Wednesday that he'll back away from a campaign promise to name China a currency manipulator, a move that would have created friction between the world's largest economies as they try to boost trade cooperation and address North Korea's nuclear threat.

In a Wall Street Journal interview, Trump said China hasn't manipulated the yuan for months, but accused some nations that he didn't identify of devaluing their currencies and saying the dollar is getting too strong.

Trump may perhaps want to play big brother to Korea in order to coerce China into giving US exporters greater market access and further rebalances the economy to rectify the huge trade imbalance.

The Treasury report said that for a decade China engaged in one-way, large-scale interventions to hold down the currency, and then only allowed it to strengthen gradually - a practice that imposed ''significant and long-lasting hardship on American workers and companies.'' While China has been intervening to prevent a depreciation of the yuan, its selling of foreign currency reserves abated early this year, Treasury said.

Now, China needs to show that its lack of intervention in the currency markets ''to resist appreciation'' over the past three years is a ''durable'' policy by allowing the yuan to strengthen ''once appreciation pressures resume,'' the Treasury said.