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WASHINGTON (Reuters) – A monetary agreement between the United States and China, made in good condition as a symbol of progress in trade negotiations between the world`s two largest economies this week, would largely reiterate China`s commitments so far, monetary experts say, and would not change the dollar-yuan relationship, which was a thorn in President Donald Trump`s side. Since 1994, the Ministry of Finance had not called China a currency manipulator. Beijing had recently met only one of the three ministry criteria required for such a designation – a large bilateral trade surplus with the United States. However, China should take decisive steps to avoid persistent currency weakness and allow for greater market opening to strengthen its long-term growth prospects. “China is a currency manipulator – that`s a fact,” Schumer said in a statement. “Unfortunately, President Trump would rather yield to President Xi (Jinping) than stand firm against China.” As a presidential candidate, Trump promised to applaud China with the manipulative label. But Mr. Mnuchin decided not to do so in the first five reports published by his department. The ministry said China did not meet the criteria of the monetary manipulation department. The signing of the Phase 1 agreement crowns a rocky two-year trade dispute between the two nations, in which punitive tariffs were imposed on billions of dollars of goods from each nation.

The fight has exacerbated uncertainty and led companies to withdraw their investments and slow global growth. It has also shaken financial markets with fears that the trade war is serious enough to drag the U.S. economy into recession. The United States stated that it made the change because China agreed not to devalue its currency in order to make its own goods cheaper for foreign buyers. The agreement provides the United States with certain benefits in financial services, including electronic payments, securities, fund management and insurance, but many of these changes were already underway. Already in 2017, in its attempt to ease tensions with the Trump administration, China had tried to give foreign companies greater supremacy in its financial sector, and U.S. banks and other companies held majority stakes in Chinese companies. Brad Setser, an economist at the Council on Foreign Relations, said China first promises things it is already doing and remains cautious about its actual interventions. “Certainly, it does not provide the market with new information about China`s actual monetary practices,” Setser said. However, such an agreement would allow the U.S.

Treasury to withdraw from a misrepresentation, according to monetary experts, in August that Beijing would be a “currency manipulator” that would reduce the value of the yuan in order to obtain “unfair competitive advantages in international trade.” The Treasury is required to report to Congress twice a year, in April and October, on whether countries manipulate their currencies for unfair trade advantages vis-à-vis American companies and workers. When a country manipulates its currency to keep it artificially low, its goods abroad become relatively cheaper – and goods from other countries become relatively expensive. The new report is three months behind schedule, apparently because the Trump administration has postponed its release until it reaches China`s monetary commitments. Mnuchin said the monetary provisions of the new U.S.-Mexico agreement are a model for future trade agreements, although they have not been repeated in a new limited trade agreement with Japan.