The United States Treasury has decided not to accuse China of manipulating its currency. Instead, the Obama administration acknowledged that the yuan, which is also known as the renminbi, was appreciating but not at an "insufficient" rate.
"'The real exchange rate of the renminbi (RMB) is persistently misaligned and remains substantially undervalued, though the degree of this undervaluation appears to have declined significantly,' the Treasury said in an annual report to Congress."
"The Treasury said the currency, also called the yuan, had risen 7.5 percent against the dollar in the 18 months since Beijing began allowing a managed appreciation, and by 12 percent if China's high inflation rate is figured in."
The issue of currency manipulation matters, because if China keeps its currency low it means it can sell its goods cheaper in places like the U.S. A cheaper Yuan also makes U.S. goods more expensive.
As the AP reports, "the decision will likely anger unions and Democratic lawmakers, who have accused Beijing of artificially holdings down the value of its currency to gain trade advantages."
Dow Jones News Wire reports that the Treasury had delayed this report, which was due in October, "in the hopes of using global summits as leverage to convince China to let the yuan appreciate more quickly."
Dow Jones says it's no coincidence that the report was released while congress members were on holiday.
Update at 5:20 p.m. ET. More On The Criticism:
As expected, the criticism of the Obama administration's decision has begun. Former Massachusetts Governor Mitt Romney, who is campaigning for the Republican presidential nomination, said if elected president he would declare China a currency manipulator on his first day in office, according to the AP.
The Associated Press reports:
"Scott Paul, executive director of the Alliance for American Manufacturing, also questioned the decision.
"'I'm disappointed that President Obama has now formally refused six times to cite China for its currency manipulation, a practice which has contributed to the loss of hundreds of thousands of American manufacturing jobs,' Paul said."
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