The U.S. Treasury has announced that it is dropping its designation of China as a currency manipulator.
The phase one deal that is set to be signed today will include about $200 billion in purchases over two years by China that will be spread between manufacturing, energy, services, and agricultural products.
As part of the deal, the U.S. Treasury dropped its designation that China is a currency manipulator. In return, China is expected to commit cease depressing its exchange rate and will make additional disclosures about its foreign-exchange practices.
The decision to drop China’s currency manipulator label marks a reversal from August, when Mnuchin took the rare step of issuing the formal designation against China at a moment when trade relations between the two countries were spiraling downward. Even though U.S. lawmakers, economists and industry representatives have long accused China of undervaluing its currency to make its exports more competitive, the move sparked some criticism on the Hill.
Senate Minority Leader Chuck Schumer (D-N.Y.) said in a statement “Unfortunately, President Trump would rather cave to President Xi than stay tough on China,” and “when it comes to the president’s stance on China, Americans are getting a lot of show and very little results.”
Sen. Rick Scott (R-Fla.) added, “just because we’re negotiating a trade deal doesn’t mean we should ignore Communist China’s bad acts.” He followed up that statement on Twitter saying, “They’re also human rights violators and the world biggest polluters. We can’t forget that… they are a currency manipulator. Period.”
U.S. Treasury will still keep China on a “Monitoring List” of trading partners whose currency practices deserve close attention. China will join nine other countries, including Germany, Ireland, Italy, Japan, Korea, Malaysia, Singapore, Switzerland and Vietnam.