In its semiannual report to Congress on international economic and exchange rate policies, the Treasury Department dealt with actions taken by China to appreciate its currency, the yuan, also called the renminbi, and move to a more market-determined exchange rate.
The Chinese currency has been an ongoing issue, with some critics in the United States saying China has artificially kept the value of the yuan against other major currencies low to run huge trade surpluses at the expense of importing countries since a lower yuan makes its goods cheaper. China, whose economy is heavily export-driven, has been under growing pressure from Western nations to allow its currency to appreciate so as to create a level playing field in international trade.
In its report, covering the first half of this year, the Treasury said the yuan has "appreciated by 9.3 percent in nominal terms and 12.6 percent in real terms against the dollar since June 2010."
The report said China's trade and current account surpluses both have come down to 2.6 percent of its gross domestic product from peaks of 8.8 percent and 10.1 percent of GDP.
"The Chinese authorities have substantially reduced the level of official intervention in exchange markets since the third quarter of 2011, and China has taken a series of steps to liberalize controls on capital movements, as part of a broader plan to move to a more flexible exchange rate regime," the report said.
However, the report said "available evidence suggests the RMB (renminbi) remains significantly undervalued, and further appreciation of the RMB against the dollar and other major currencies is warranted."
The report said Treasury will continue to closely monitor exchange rate developments and press for policy changes that yield greater exchange rate flexibility, improve transparency, level the playing field for American workers and businesses, and support a strong, sustainable and balanced global economy.
A currency manipulator designation would allow the United States to impose tariffs on Chinese goods. But such a step can also lead to a similar action by China on U.S. items it imports.
China's official Xinhua News Agency noting during this year's U.S. presidential campaign, Republican nominee Mitt Romney had vowed to label China as a currency manipulator if elected president.
Under President Barack Obama, the Treasury has not named China a currency manipulator in eight of its reports.
China's foreign trade of late has been hit by the global economic crisis, and its policymakers have been seeking to boost domestic consumption to reduce reliance on exports.