Published: Thu, April 20, 2017
World | By Carl Welch

Trump reverses views on Russia, China

Trump reverses views on Russia, China

The three criteria include a significant bilateral trade surplus with the U.S. of at least USD20 billion and a material current account surplus which is at least 3% of GDP.

Asian equities evaded currency manipulator label in the latest report by U.S. Treasury, but still remain wary of possible trade frictions, as U.S. President, Donald Trump maintains his administration will seek to address trade imbalances.

Further, the report said that greater transparency of China's exchange rate and reserve management operations and goals was of extreme importance.

Later in the week, the US Treasury Department did not label China a currency manipulator in its semi-annual report on global currency practices.

"China will need to demonstrate that its lack of intervention to resist appreciation over the last three years represents a durable policy shift", the report said.

However, it is not easy for Taiwan to be removed, as the nation has a small and open economy, and tends to post a large current-account surplus, it said.

The recent change in mood has been detected since Trump met Chinese President Xi Jinping for the first time at Mar-A-Lago in Florida last week.

In the Trump campaign's "contract" with American voters he promised, "I will direct the secretary of the treasury to label China a currency manipulator" in the first 100 days of his presidency.

"They're not currency manipulators", he said. The country's Deputy Prime Minister of economics and Finance Minister Yoo Il-ho called his US counterpart Steven Mnuchin on Thursday, the day before the report was released, to convince him that Korea is doing its best to reduce what the new Trump administration sees as a trade imbalance.

In its exchange rate report to Congress, the treasury said that in spite of China's large trade surplus with the USA, it was not acting improperly to depress the value of its currency.

A currency manipulator designation is largely symbolic and starts negotiations between the USA and any country determined to be manipulating its exchange rate.

"They're not currency manipulators", Trump told The Wall Street Journal, explaining Beijing had not manipulated the yuan for months. The list was unchanged from the previous report in October.

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