China doesn't manipulate its currency?

So sayeth the Geithner Treasury, disappointingly: US declines, again, to brand China manipulator



Reuters had been expecting otherwise: US seen citing China on currency-business leader


Would that Reuters had been correct.


Macroman nailed it in January, in #8 of his predictions for '09:



8) China will NOT stop taking the piss in currency markets. In Macro Man’s ideal world, China pulls the bid in USD/RMB, slashes its FX reserves by 75% and uses the money to fund the beginnings of a domestic social safety net, and thus buggers off from trading EUR/USD. His ideal world also entails the Pittsburgh Pirates winning the World Series and West Ham the European Cup….so a cursory glance at the sports pages will confirm that we are pretty damned far away from that ideal.
While there has been a bit of sturm und drang emanating from Beijing recently about the inutility of accruing more reserves and/or buying more Treasury bonds, there is also the small matter of the economic downturn and the desire to maximize net exports. Macro Man suspects that the latter consideration will prevail in domestic policy circles, which makes sense given his views on the dollar and US bonds. As the chart below demonstrates, the rise in FX reserves in China has been inexorable (if you don’t already, tune in to Brad Setser for ongoing analysis of this issue.) So for better or for worse, we’ll all have to continue living with Voldemort, the cockroach of global finance.



Now, since MM penned these words the Chinese have altered their reserve allocations as Brad Setser indeed continues to point out. But the currency manipulation continues. We merely prefer to call the yuan 'undervalued'. HAH

American decline, realpolitique, or delusion? Bits of all three, I think. I'd prefer just being blunt, as the Chinese have been towards the US lately.