No major trading partner is manipulating its currency for an unfair trade advantage, according to the first foreign-currency report released by the US Treasury Department under US President Donald Trump on Friday.
The report said Treasury would review the currency and other trade practices of the six nations named to the monitoring list and meet with finance officials from those nations to ensure progress in shrinking their trade imbalances with the United States.
Before the elections, President Trump had vowed to label China a currency manipulator on Day One of his administration.
A 2015 law requires the Treasury Department to review the currency practices of major trading partners using three criteria, including exporting more than it imports to the US, and persistently buying or selling its currency to change its value.
"Treasury also places high importance on greater transparency of China's exchange rate and reserve management operations and goals", said the report.
And although the administration's first report to Congress on the foreign exchange policies of USA trading partners continues the stance of the Obama administration, putting six countries with troublesome policies on a watch list, it takes a much tougher tone.
"No major trading partner of the United States met the standards identified in Section 3004 of the Omnibus Trade and Competitiveness Act of 1988 for currency manipulation in the second half of 2016", the Treasury Department said in a report to Congress.
The Treasury said it "will be scrutinizing China's trade and currency policies very closely".
Trump declared on Wednesday that he would back away from a campaign promise to name China a currency manipulator, a move that would have created friction between the world's largest economies as they try to boost trade cooperation and address North Korea's nuclear threat.
"They're not currency manipulators", he said in an interview.
"Expanding trade in a way that is freer and fairer for all Americans requires that other economies avoid unfair currency practices, and we will continue to monitor this carefully", said Treasury Secretary Steven Mnuchin said in a statement.
Before the summit, Trump tweeted that the meeting would be a "very hard one" due to China's large trade deficit and the American jobs it had cost.
Trump's policy reversal on China sends a signal to global finance chiefs ahead of next week's meeting in Washington, D.C., that Trump could soften the aggressive trade positions he staked out during his campaign.
But reflecting the views of most economists, Treasury concluded that China has recently been intervening to do the opposite - to keep the renminbi from falling against the dollar and other currencies. All five of these countries were also on the list in the previous report. Germany, South Korea and Switzerland should increase public borrowing to support domestic demand for goods and services, the report suggested.