China has not engaged in currency manipulation, the Treasury Department concluded in a report released with little notice late Wednesday.
The agency published its controversial finding in its Semi-annual Report to Congress on International Economic and Exchange Rate Policies. As it has in recent years, the agency concluded that while China needs to do more to boost transparency, it is not manipulating the value of its currency, the yuan, or RMB, in order to gain an unfair advantage over other nations.
"From June 2010, when China moved off its peg against the dollar, through mid-October 2013, the RMB has appreciated by a total of 12 percent against the dollar and 16 percent in inflation-adjusted terms," Treasury said in a statement. "China's current account surplus has fallen from over 10 percent at its peak to 2.5 percent today."
A current account surplus is the amount of good and services China sells to the rest of the world over the amount of goods and services it imports from the rest of the world. Some of the drop in China's exports is likely due to the prolonged economic crisis in Europe and the sluggish four-year economic recovery in the United States.
While it stopped short of branding China a currency manipulator, the Treasury Department expressed concern that China has resumed large scale purchases of foreign currencies this year "despite having accumulated reserves that are more than sufficient by any measure."
China's foreign-exchange purchases are impeding the ability of markets to determine proper exchange rates, the agency said, and contribute to a "currency that is significantly undervalued."