WASHINGTON - The United States said Friday that China's tightly managed currency remains "significantly undervalued" but Beijing was not manipulating the yuan to gain an unfair trade advantage.
The US Treasury Department said it had concluded that China had not met the standards for manipulation but that it would continue to closely monitor the pace of appreciation of the yuan, or renminbi.
"The available evidence suggest the RMB remains significantly undervalued, and we believe further appreciation of the RMB against the dollar and other major currencies is warranted," the Treasury said in its semi-annual report to Congress on exchange rates.
The Treasury explained that the decision to not brand China a currency manipulator was based in part on the yuan's appreciation against the dollar since June 2010 and a decline in its massive current account surplus.
It also cited "China's commitments in the G20 and the US-China Strategic & Economic Dialogue to move more rapidly to a more market-determined exchange rate system."
The Treasury said the yuan had appreciated 8.0 per cent against the dollar since June 2010, when China moved off its peg against the dollar, through May 15.
But, it said, "in 2012, through May 15, the RMB has been virtually flat against the dollar."
To date, the US government has not branded China a currency manipulator in the long-running currency row.
Critics in Congress accuse China of keeping the yuan artificially low to make Chinese exports to the United States unfairly cheap, costing US jobs.
The Treasury regularly reports to Congress its review of the exchange rate policies of nine economies that account for 70 per cent of the nation's foreign trade.