WASHINGTON – The Bush Administration continues to find insufficient technical evidence that China is manipulating its currency to gain an unfair trade advantage.
The twice annual "Report to Congress on International Economic and Exchange Rate Policies," released by the Treasury Department on Dec. 19, stated that while China has "taken further steps to reform the currency market and renminbi (RMB) flexibility … this increased flexibility is less than is needed.”
Yet, despite noting this disappointment, the report concluded "that no major trading partner of the United States met the technical requirements for designation under the terms of Section 3004 (of the Omnibus Trade and Competitiveness Act of 1988) during the period under consideration."
The report notes that the RMB appreciated by 0.94% against the dollar during the first half of 2006. "Chinese authorities took several steps to develop the foreign exchange market and average daily fluctuations of the RMB were twice as large in the first half of 2006 as in the last half of 2005, although the degree of flexibility is still low by comparison to other major trade currencies.".
Some U.S. manufacturing trade groups contend that China undervalues its currency by as much as 40% against the dollar. This makes Chinese goods cheaper for American consumers and U.S. goods more expensive to export to China.
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