On Tuesday the Treasury released its semiannual report on global exchange rates. As usual, much of the focus is on China. As usual, the renminbi (or yuan) is still undervalued. And as usual, the report makes no mention of China as a “currency manipulator,” owing to the fact that use of that label would force the U.S. and China to engage in formal talks that neither country is particularly anxious to have.
This isn’t to say that the Treasury is pleased with China. Although the report concedes that Beijing has made some positive changes, by allowing the yuan/renminbi to strengthen slightly the dollar, the underlying message is the same: the Yuan is undervalued, and government policy is to blame. As the WSJ reports:
Despite those gains, the Treasury reiterated its stance that Beijing should allow greater flexibility in its exchange rate, something U.S. officials have pressed for in bilateral talks and in international forums.
“The available evidence suggests the [yuan] remains significantly undervalued, and further appreciation of the [yuan] against the dollar and other major currencies is warranted,” the Treasury said.
The Chinese Embassy in Washington didn’t respond to calls seeking comment. But Chinese policy makers regularly say that the yuan is nearing “equilibrium,” meaning it doesn’t have much more to appreciate.
Yuan yawn. Once again, the U.S. fails to name China a currency manipulator. Once again, no one is surprised.