The Obama administration declined to name China a currency manipulator on Friday, even though it said the yuan was “substantially undervalued,” sparking fresh calls for legislative retaliation to try to reduce a swelling trade deficit.
Treasury said China’s yuan should rise more quickly but said it lacked evidence to label Beijing a manipulator, a designation that could trigger trade action.
“Treasury’s view…is that progress thus far is insufficient and that more rapid progress is needed,” the report said. “Treasury will continue to closely monitor the pace of appreciation of the (yuan) by China.”
The finding was no surprise and came in a long-delayed report to Congress that Treasury kept under wraps until after a state visit by Chinese President Hu Jintao last month.
One lawmaker said on Friday he would propose legislation next week aimed at forcing China to revalue its currency.
Treasury Secretary Timothy Geithner has been trying to prompt China into letting the yuan — also known as the renminbi — rise more swiftly, something that is seen as vital for rebalancing global growth.
A higher-valued yuan would make imports cheaper for Chinese consumers and encourage Beijing to seek more growth through domestic consumption than through exports.
Other countries including Brazil have similarly expressed unhappiness at the impact on their domestic industries from cheap Chinese imports. Geithner is visiting Brazil on Monday and has a chance to seek an ally for making the case at the Group of 20 meeting in Paris later this month that China should speed up yuan appreciation.