U.S. wants China, Germany to do more to cut trade surpluses

PanARMENIAN.Net - 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, April 14, according to AFP.

The decision was expected after President Donald Trump this week reversed himself and said China was not a currency manipulator.

And although the administration's first report to Congress on the foreign exchange policies of US trading partners continues the stance of the Obama administration, putting six countries with troublesome policies on a watch list, it takes a much tougher tone.

Unlike the previous administration, which issued its final report in October, the latest semi-annual report urges specific policy actions the countries should pursue that would lead to a lower trade surplus.

Trump repeatedly pledged in his election campaign to name China as a currency manipulator on his first day in office -- prompting fears of a trade war -- but did not do so. He publicly retreated from that position after meeting with Chinese President Xi Jinping in Florida last weekend.

China met only one of the three criteria required to be labeled a currency manipulator -- a large trade surplus with the United States -- while Germany also met a second: a current account surplus amounting to more than three percent of the nation's economic output.

Beijing has not intervened recently in markets to weaken the value of its currency -- the third criteria -- and in fact has tried to keep the renminbi from falling further amid the country's relatively sluggish growth rate.

Germany, as part of the eurozone, cannot act unilaterally to change the value of the euro.

A weaker currency makes exports cheaper compared with those of competitors. Declaring a country a manipulator would set off a process including negotiations that could culminate in punitive trade sanctions on the offender.

Japan, South Korea, Taiwan and Switzerland also were again included on Treasury's monitoring list.