Harder on Russia and softer on China, Trump's views evolving

During the 2016 campaign, the then-Republican presidential nominee often said that China was manipulating its currency to boost exports, a policy that cost American manufacturing jobs.

Mr Trump's closest adviser, Stephen Bannon, said there would be "war" with China in the near future, and his Secretary of State Rex Tillerson condemned China for its "illegal" artificial island-building in the disputed territory of the South China Sea, but Mr Trump appears to have watered down his stance to ensure China is on the same side as the U.S. when it comes to tackling North Korea.

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.

However, the Treasury Department did not name Taiwan as a currency manipulator, with the administration of US President Donald Trump declining to name any major trading partner as a currency manipulator.

Trump said the Chinese "are not currency manipulators", in a Wednesday interview with the Wall Street Journal, stepping back from past accusations that the Chinese are the "grand champions at manipulation of currency".

USA manufacturers and Trump supporters who wanted tough talk on U.S. trading partners could be disappointed that the President declined to use the label following his meeting with Chinese President Xi Jinping.

The move was expected as Trump earlier this week had said that China was not a currency manipulator.

The recent Treasury report noted that while China had spent a decade deliberately buying and selling large amounts of its own currency on global markets to depreciate its value and make its exports more competitive, the country had turned around in recent months to make its currency appreciate in value. "I think China has really been working very hard" on North Korea, he said.

But reflecting the views of most economists, Treasury concluded that China has recently been intervening to do the opposite - to keep the renminbi from falling against the dollar and other currencies.

China's Ministry of Foreign Affairs did not immediately respond to a request on Saturday seeking comment on the report. He promised to label the country a currency manipulator on Day One of his administration. China has burned through nearly $1 trillion of its foreign reserves, or about a quarter of the total stockpile, since mid-2014 to help support the currency.

US retail sales dropped more than expected in March while annual core inflation slowed to 2.0 percent, the smallest advance since November 2015, from 2.2 percent in February, data showed on Friday. "Treasury does have some choice words for China, accusing it of causing "long-lasting hardship" to American workers".

The most important result of the meeting, regardless of the announcement that the U.S. Prtesident will visit China this year, lies in the fact that the parts convened a plan of 100 days to discuss their differences in economic issues, what was described by U.S. Secretary of Commerce, Wilbur Ross as a very big change in the rhythm of discussions.

The 2016 U.S. trade deficit was the largest in four years, totalling $502 billion (472 billion euros) when goods and services are summed.

Korea's trade surplus with the USA was $27.7 billion at the end of past year and the current account surplus is equivalent to 7 percent of the nation's GDP.

In the previous report, Taiwan met both criteria.

Switzerland "could increase reliance on policy rates in order to limit the need for foreign-exchange interventions, which should be made more transparent".

Treasury is committed to aggressively and vigilantly monitoring and combating unfair currency practices, it added.

"The United States can not and will not bear the burden of an worldwide trading system that unfairly disadvantages our exports and unfairly advantages the exports of our trading partners through artificially distorted exchange rates", the report stated.

In a statement, the Treasury said the findings and recommendations of the Report are meant to combat potentially unfair currency practices and support the growth of free and fair trade.

The department is required by law to report to Congress twice a year on whether America's major trading partners are gaming their currencies.

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