Sun, December 5, 2021
The US Treasury Department said it will keep a close eye on China’s economic policies and measures to affect the value of its currency, along with those of Vietnam, Taiwan and Switzerland.
While no country has been accused of tampering with its currency to gain a competitive advantage, 12, including China, have been placed on Washington’s watch list.
The US semi-annual report to Congress looks at countries with large trade surpluses that are actively intervening in foreign exchange markets to prevent their currencies from appreciating, making their exports more competitive.
However, an official from the Treasury Department told reporters he was not concerned about currency measures to deal with short-term shocks.
The results of the report are largely symbolic and do not involve any sanctions.
Beijing has long been a target of controls, and Washington has often accused the government of keeping the exchange rate artificially low through its massive US dollar inventory, undermining US manufacturers and workers.
“The Treasury Department is working tirelessly to promote a stronger and more balanced global recovery that will benefit American workers, including by working closely with key economies on currency-related issues,” Treasury Secretary Janet Yellen said in a statement.
Criticizing Beijing for its lack of transparency in its foreign exchange interventions, the report said: “The activities of state-owned banks in particular warrant close scrutiny by the Treasury Department.
“Given China’s long history of facilitating an undervalued currency through protracted, large-scale interventions in the foreign exchange market, and the sheer size of China’s reserves, it is increasingly worrying that China has failed to improve the transparency of its foreign exchange policy and practices,” added the Add report.
Like many governments, Beijing put huge stimulus measures in place during the Covid-19 pandemic to prop up the economy, but spending “aimed to restart production early rather than support consumption by households.”
The Treasury Department called for more “demand-side incentives” and said, “China should try to reverse lost momentum in economic realignment and strengthen long-term growth prospects.”
Switzerland narrowly missed meeting all three criteria set in the legislation for additional scrutiny, but “the Ministry of Finance will continue to conduct an in-depth analysis” of the country’s policies and continue to liaise with the government “on policy options to be discussed by the Swiss authorities ”. the underlying causes of its external imbalances. “
Washington reached an agreement with Vietnam in July that continues to meet all three criteria to address concerns about the country’s currency practices.
The report also said the Treasury Department has entered into talks with Taipei to “develop a plan of specific measures to address the underlying causes of Taiwan’s currency undervaluation”.
The Treasury Department’s watch list of countries that meet two of the three criteria includes China, Japan, Korea, Germany, Ireland, Italy, India, Malaysia, Singapore, Thailand, Mexico, and Switzerland. All but Switzerland were on the watch list in the April 2021 report.