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 In the Treasury's semi-annual report on economic and currency
policies of major trade partners, the United States also said that
the yuan, officially known as the renminbi, remains below its
"appropriate medium-term valuation."
The language is a shift from the previous report in April, when the
United States said the Chinese currency was significantly
undervalued.
The Treasury, in its regular scorecard, did not label any major
trading partner a currency manipulator but called on countries with
current account surpluses, which include Germany and South Korea, to
do more to boost flagging global growth.
The roughly $50 per barrel decline in the price of oil is shifting
income of over $600 billion annually from oil exporters to oil
importers, the Treasury said.
The Treasury estimated that non-FDI capital outflows from China
likely hit $520-530 billion in first eight months of this year,
including $200 billion in August alone.
"Market factors are exerting downward pressure on the RMB at
present, but these are likely to be transitory," it said.
Worries over China's economic slowdown and possible interest rate
rises by the U.S. Federal Reserve have led to a wave of capital
outflows that intensified after Beijing's surprise devaluation of
the yuan on Aug. 11.
In a bid to stabilize the currency afterwards, China's central bank
and commercial banks sold a record net 761.3 billion yuan ($119.85
billion) of foreign exchange in September, data showed on Friday, as
capital outflows weighed on the yuan.
Traders believe the central bank intervened forcefully both in the
domestic and global yuan markets.
U.S. Treasury Secretary Jack Lew has been urging China to allow its
currency, the yuan, to float more freely.
Many U.S. lawmakers have repeatedly complained that China
deliberately undervalues its currency to gain a competitive
advantage in international markets. The last time the Treasury
labeled a country a manipulator was China in 1994.
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"We will continue to steadily advance yuan exchange rate mechanism
reform according to relevant principles," Chinese Foreign Ministry
spokeswoman Hua Chunying told a regular news briefing on Tuesday.
Before the devaluation, the currency had been slowly appreciating as
the Chinese government sought to support its aim of shifting the
economy's main engine from exports to domestic demand.
"Further currency appreciation is key...and will support the
purchasing power of Chinese consumers and help shift production
towards non-traded goods and services," the report said.
China is pushing for the yuan to be included in the International
Monetary Fund's benchmark currency basket as a means of reducing its
dependence on the dollar, but policymakers have yet to decide if it
has met all the market-based criteria.
Elsewhere in the report, the United States again called for South
Korea to curb currency interventions and repeated that the won <KRW=>
appeared to be "undervalued" and should be allowed to appreciate
over the medium term.
The U.S. Treasury also urged Japan to recalibrate fiscal policy to
support economic growth and reduce reliance on yen depreciation to
boost exports.
(Reporting by Lindsay Dunsmuir, Krista Hughes and Kevin Yao and
Michael Martina in BEIJING; Editing by Diane Craft & Kim Coghill)
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