The U.S. removed its designation on China as a currency manipulator as both countries prepare for the signing of their "phase one" trade deal Jan. 15.
The initial trade deal between the U.S. and China contains "enforceable commitments" from Beijing to "refrain from competitive devaluation, while promoting transparency and accountability," Treasury Secretary Steven Mnuchin said in the department's latest biannual report to Congress on economic and exchange rate policy.
China will instead return to the Treasury's "monitoring list" of economies that "merit close attention" due to their exchange-rate practices. Also in this list are Germany, Ireland, Italy, Japan, South Korea, Malaysia, Singapore, Switzerland, and Vietnam.
President Donald Trump's administration designated China a currency manipulator in August 2019 as Beijing allowed the yuan to fall below the 7-per-dollar threshold for the first time in 11 years in an apparent response to a tariff threat from Washington.
China devalued the yuan "to gain unfair competitive advantage in international trade," with the People's Bank of China having "extensive experience" in manipulating currency, the Treasury said in 2019. The Chinese central bank denied the allegations and stepped in to contain the weakness in the yuan.
In its annual review of China's economy, published in August 2019, the International Monetary Fund said the yuan has been "broadly stable" against a basket of currencies, with estimates suggesting that the central bank has made only minimal foreign exchange interventions.