Renminbi “Severely Undervalued”; CCP Foreign Exchange Policy Lacks Transparency

U.S. Department of the Treasury building next to the White House. (July 26, 2025 / VOA)

[People News] The latest edition of the Macroeconomic and Foreign Exchange Policies of Major Trading Partners of the United States report, released Thursday (January 29) by the United States Department of the Treasury, did not designate China as a “currency manipulator.” However, it emphasized that China has the lowest level of foreign exchange policy transparency among major trading partners and that the renminbi (RMB) remains “severely undervalued.” The Treasury urged Beijing to allow the RMB to “strengthen in a timely and orderly manner.”

According to Voice of America, the report covers four quarters through June 2025 and includes major U.S. trading partners accounting for about 78% of total U.S. foreign trade.

Treasury Secretary Scott Bessent said the report reflects the core goals of President Donald Trump’s “America First” trade policy.

“President Trump is committed to pursuing economic and trade policies that help revitalize the U.S. economy, marked by strong growth, the elimination of harmful trade deficits, and countering unfair trade practices,” Bessent said.

He added, “The Treasury is closely monitoring whether trading partners manipulate their currencies through foreign exchange intervention or non-market policies to gain unfair competitive advantages.”

Bessent also noted that starting with this report, the Treasury has “strengthened its analysis of countries’ exchange rate policies and practices.”

Report: RMB “Clearly Undervalued”; China’s FX Policy Lacks Transparency

The Treasury stated that China’s foreign exchange operations remain opaque—the least transparent among major trading partners—and emphasized that the value of the RMB is inconsistent with China’s large and growing trade surplus.

The report said, “Given China’s extremely large and growing current account surplus, along with its severely undervalued exchange rate, Chinese authorities must allow the RMB to strengthen in a timely and orderly manner in line with market pressures and macroeconomic fundamentals.”

The International Monetary Fund recently noted that China’s surge in exports and record trade surplus are partly due to the real depreciation of the RMB. Goldman Sachs estimated last December that the RMB was undervalued by as much as 25%.

Ten Economies Placed on the “Monitoring List”

The Treasury said no major trading partner met all three statutory criteria to be formally labeled a currency manipulator during the period. However, ten economies were placed on the enhanced “monitoring list”: China, Japan, South Korea, Taiwan, Singapore, Vietnam, Germany, Ireland, Switzerland, and Thailand. Compared with last year, Thailand was the only new addition.

The Treasury said these countries will face stricter scrutiny, including their foreign exchange interventions, capital controls, macroprudential measures, and policies of sovereign wealth funds and government investment institutions that may indirectly affect exchange rates.

China Remains the Top Concern: Possible Future Redesignation

Although China was not designated a currency manipulator this time, the Treasury made clear that it remains one of the most closely watched economies.

“China’s lack of transparency in its foreign exchange policies will not prevent the Treasury from making a future manipulator designation—if evidence shows that China is preventing RMB appreciation through formal or informal channels.”

During his previous term, President Trump briefly labeled China a currency manipulator before rescinding the designation ahead of a U.S.–China trade agreement.

On Tuesday, Trump criticized China and Japan at an event in Iowa, accusing them of trying to weaken their currencies. “Look at China and Japan—I fought them hard because they always want to depress their currencies. When they devalue, it’s very hard for us to compete. But they still want our dollars,” he said.

The latest report suggests that if China continues expanding its trade surplus or suppressing RMB appreciation, Washington may take further action.
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