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US decides against China currency investigation | US decides against China currency investigation |
(25 days later) | |
The US government has decided to drop a general investigation of China's currency policy, avoiding a major trade dispute. | The US government has decided to drop a general investigation of China's currency policy, avoiding a major trade dispute. |
However, it ruled that more than $500m (£325m) of aluminium imports had been unfairly subsidised. | |
The US will retaliate with duties of up to 137% on the relevant products. | The US will retaliate with duties of up to 137% on the relevant products. |
The Commerce Department had been asked by US manufacturers in April to look at Chinese exports of aluminium goods used in car production and construction. | The Commerce Department had been asked by US manufacturers in April to look at Chinese exports of aluminium goods used in car production and construction. |
The main point at issue was whether China unfairly subsidised its exports by manipulating its currency. | The main point at issue was whether China unfairly subsidised its exports by manipulating its currency. |
Many economists and politicians in the US allege that China holds the value of the yuan down, making its exports artificially cheap. | Many economists and politicians in the US allege that China holds the value of the yuan down, making its exports artificially cheap. |
If the broader currency investigation had gone ahead, this could have led to serious diplomatic tensions with China, analysts say. | If the broader currency investigation had gone ahead, this could have led to serious diplomatic tensions with China, analysts say. |
"Today's currency decision was based on a careful evaluation of the specific legal arguments and evidence," the Commerce Department said. | "Today's currency decision was based on a careful evaluation of the specific legal arguments and evidence," the Commerce Department said. |
'Currency manipulator' | 'Currency manipulator' |
The decision suggests that Barack Obama's administration will continue to use diplomatic means to encourage Beijing to strengthen the yuan, instead of adopting open confrontation. | The decision suggests that Barack Obama's administration will continue to use diplomatic means to encourage Beijing to strengthen the yuan, instead of adopting open confrontation. |
However, the US president is under pressure to come up with a new plan to turn the flagging economy around before mid-term elections in November. | However, the US president is under pressure to come up with a new plan to turn the flagging economy around before mid-term elections in November. |
Many Congressmen want to pass legislation paving the way for retaliatory sanctions. | Many Congressmen want to pass legislation paving the way for retaliatory sanctions. |
In July, US Treasury Secretary Tim Geithner released a postponed report into China's currency policy which avoided labelling the country a "currency manipulator". | In July, US Treasury Secretary Tim Geithner released a postponed report into China's currency policy which avoided labelling the country a "currency manipulator". |
That accusation would have provided a basis for efforts within the US Congress to pass punitive trade sanctions against China. | That accusation would have provided a basis for efforts within the US Congress to pass punitive trade sanctions against China. |
Shortly afterwards, China responded by allowing the yuan to strengthen gradually against the US dollar. | Shortly afterwards, China responded by allowing the yuan to strengthen gradually against the US dollar. |
But the Chinese currency has gained less than 0.5% in value since then. | But the Chinese currency has gained less than 0.5% in value since then. |
Moreover, recent trade data has shown the US running enormous trade deficits again - and China running surpluses - despite the US economy remaining weak. | Moreover, recent trade data has shown the US running enormous trade deficits again - and China running surpluses - despite the US economy remaining weak. |