WASHINGTON – The Bush administration on Wednesday announced it would not brand China as a country that was manipulating its currency to gain unfair trade advantages.
The decision came in spite of growing pressure in Congress to take punitive action to deal with a U.S. trade deficit with China that hit a record $202 billion last year.
Treasury Secretary John Snow did say he was "extremely dissatisfied" with the pace of China's currency reforms.
American manufacturers contend that China has been artificially keeping its currency devalued by as much as 40 percent against the dollar, giving Chinese manufacturers a huge competitive advantage against U.S. products.
However, the administration said in the latest currency report to Congress that it did not believe China technically met the definition in the law of a currency manipulator.
It noted that China last July announced it was abandoning a fixed link of the yuan's value to the dollar, although since that time the yuan has risen in value by only about 3 percent.
"We are extremely dissatisfied with the slow and disappointing pace of reform of the Chinese exchange rate regime," Snow said.
"We are not satisfied with the progress made on China's exchange rate regime and we will monitor closely China's progress every step of the way," he said.
The currency report, which the administration must present to Congress every six months, was delayed by a few weeks, until after Chinese President Hu Jintao and President Bush discussed the currency dispute during a White House meeting on April 20.
The administration had hoped that Hu would signal China would move faster to allow its currency to rise in value against the dollar, but no such announcement came out of the half-day summit last month.