US raises concerns over China's lack of currency transparency

Amid escalating trade tensions between the United States (US) and China, the U.S. Department of the Treasury has raised concerns over China's lack of currency transparency and the recent weakness in its currency.

The Treasury Department, in the semiannual report on macroeconomic and foreign exchange policies of major trading partners of the United States, noted that while China's exchange rate practices continue to lack transparency, direct intervention by the People's Bank of China this year has been limited. However, recent depreciation of the renminbi will likely exacerbate China's large bilateral trade surplus with the United States, an official statement from the department said.

"The Treasury Department is working vigorously to ensure that our trading partners dismantle unfair barriers that stand in the way of free, fair, and reciprocal trade. Of particular concern are China's lack of currency transparency and the recent weakness in its currency. These pose major challenges to achieving fairer and more balanced trade, and we will continue to monitor and review China's currency practices, including through ongoing discussions with the People's Bank of China," said U.S. Treasury Secretary Steven T. Mnuchin, as per the statement.

The Treasury Department further noted that it places significant importance on China adhering to its commitments to refrain from engaging in competitive devaluation and to not target China's exchange rate for competitive purposes. China could pursue more market-based economic reforms that would bolster confidence in the renminbi, it added.

Six major trading partners have been highlighted that continue to warrant placement on the "Monitoring List" of major trading partners that merit close attention to their currency practices: China, Germany, India, Japan, Korea, and Switzerland.

"Treasury is working actively across a broad range of areas to help ensure that trade expands in a balanced way that protects U.S. firms and workers against unfair foreign trade practices. The United States is committed to working towards a fairer and more reciprocal trading relationship with China. To this end, we are engaging China to address its market-distorting policies and practices," the statement further noted.

Washington and Beijing have been engaged in an escalating trade war from the past few months, with both nations slapping high tariffs on each other's goods and imports. This has led to the straining of ties between the world's two largest economies.

Last month, US President Donald Trump imposed a fresh 10 per cent tariffs on Chinese products amounting to USD 200 billion. Beijing, in turn, imposed tariffs worth USD 60 billion of American goods. Both the countries have threatened new waves of tariffs in the near future.