Benjamin Franklin US 100 dollar banknotes and a Chinese 100 yuan banknote with the late Chinese Chairman Mao Zedong are seen in this January 21, 2016 picture illustration (REUTERS / Jason Lee)
Washington: 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, said the Treasury Department.
The decision was expected after President Donald Trump this week reversed himself and said China was not a currency manipulator.
Unlike the Obama 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, prompting fears of a trade war. 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 Germany, as part of the Eurozone, cannot act unilaterally to change the value of the euro.
