(Reuters) - The United States is planning to lift its designation of China as a currency manipulator, Bloomberg reported on Monday, citing people familiar with the matter, as leaders of the two economies are set to sign a Phase 1 trade deal this week.
The U.S. Treasury Department will take the step in a long-delayed semi-annual report that it will release soon, according to Bloomberg bit.ly/36O9Mwk.
U.S. Senate Democratic leader Chuck Schumer, a fierce critic of China’s currency and trade practices, on Monday blasted the Trump administration for what he described as its decision to “back down” from labelling China as a currency manipulator.
“China is a currency manipulator — that is a fact,” Schumer said in a statement released by his office. “Unfortunately, President (Donald) Trump would rather cave to President Xi (Jinping) than stay tough on China.”
The United States and China are due to sign a Phase 1 trade deal this week that includes provisions to prevent competitive devaluations. U.S. Treasury officials had no immediate comment on the Bloomberg report.
Officials briefed on the trade deal have said it will outline some of China’s commitments to improve transparency around its management of the yuan, and will contain a mechanism for enforcing those commitments.
Washington in August accused Beijing of manipulating its currency after China let the yuan drop to its lowest point in more than a decade. It was the first time since 1994 that the Treasury Department accused China of manipulating its currency, the yuan.
The yuan reached five-month highs on Monday amid heavy demand ahead of this week’s signing of the Phase 1 trade deal.
China’s central bank in August denied it had intervened to weaken the yuan, and said Washington’s designation of China as a currency manipulator seriously harmed international rules.
Economists say China had previously distorted the value of its currency, but had in recent years acted to support the yuan amid a weakening economy.
Reporting by Kanishka Singh in Bengaluru and Andrea Shalal in Washington; Editing by Franklin Paul and Richard Chang