US clears China on forex manipulation

The US says that China is not manipulating its currency. The US Treasury Department made the remarks on Thursday in a semiannual report to Congress on currency practices of key trade partners. It also recognized the Chinese government's stimulus measures against the global financial crisis.

The US Treasury Department says that no US trade partner is a deliberate manipulator. And China has pumped stimulus funds into its own economy during the global economic downturn. The report says this has played an important role in stabilizing the world economy and reducing China's trade surplus.

But it repeats that it considers China's yuan undervalued. Some US experts say that parts of the report relating to China are misleading.

Albert Keidel. Senior Fellow, Atlantic Council of the United States, said, "The idea that renminbi has re-linked itself to the dollar as a permanent policy is a misleading aspect of the report... It also didn't mention that China's surplus dropped dramatically in the second and third quarters."

The report also says global financial conditions have improved dramatically and signs of an economic recovery have begun to emerge. But it warns that personal consumption is still weak and unemployment rates in many countries are still high. So the report says the recovery is still not solid.