Just two days before President Trump and Vice Premier Liu He is set to sign "phase one" of a long-awaited trade deal, the Treasury Department of United States on Monday announced that China will no longer be designated as a currency manipulator. The US has made the decision because China has agreed to refrain from devaluing its currency to make its own goods cheaper for foreign buyers.
China was added to the list five months ago by the US citing the former's tactics of currency devaluation after its government allowed the yuan to slip below a 7-to-1 dollar ratio for the first time in over a decade. Trump had repeatedly argued that the Chinese had depreciated their currency slowly to help offset tariffs on billions of dollars of Chinese goods amid an ongoing trade war between the two major economic superpowers.
In the midst of escalating trade tensions over the summer, Trump had directed his Treasury secretary in August to formally label China a currency manipulator after the country's central bank allowed the yuan to depreciate.
However, China will now be moved to the "monitoring list" joining nine other countries including Germany, Ireland, Italy, Japan, South Korea, Malaysia, Singapore, Switzerland and Vietnam. "China has made enforceable commitments to refrain from competitive devaluation while promoting transparency and accountability," said Treasury Secretary Steven Mnuchin in a statement.
Also, the US and China, two of the world's largest economies finally brokered a partial trade deal late in the year 2019 after a series of trade wars that disturbed the financial markets across the world and also complicated the lives of American farmers and consumers.
The United States hadn't labeled any country a currency manipulator since it tagged China in the early 1990s under President Bill Clinton. Designating a country doesn't immediately trigger penalties, but it is seen by other governments as a provocation.