The U.S. Treasury Department dropped its designation of China as a currency manipulator just two days before negotiators from Beijing and Washington are set to sign the first phase of the trade deal between the two countries. “China has made enforceable commitments to refrain from competitive devaluation, while promoting transparency and accountability,” Treasury Secretary Steven Mnuchin said in a statement Monday.
The report said the trade agreement’s chapter on Chinese currency practices addresses many of the concerns raised when the U.S. applied the manipulator designation in August. As part of the agreement, China will commit not to depress its exchange rate and will make additional disclosures about its foreign-exchange practices. The Treasury also noted that the Chinese currency had strengthened in recent months, a development that helps address U.S. concerns that the yuan is too weak.
The currency component has been a focus of Mr. Mnuchin in talks with China, and the administration has said it was one of the trade deal’s most significant parts. No new countries were slapped with the designation on Monday.
U.S. lawmakers, economists and industry representatives have long accused China of undervaluing its currency to make its exports more competitive, with some saying U.S. jobs were lost as a result. Even so, the concern had faded in recent years because Beijing wasn’t highly active in its currency markets. The Treasury Department refrained from branding China a manipulator until August, the first time it did so since 1994.