U.S. wants China, Germany to do more to cut trade surpluses

Trump has informed that some of U.S.'s trading partners, mainly China, manipulated their currency but has since backed off that claim, and acknowledged China has not weakened the Yuan to make exports cheaper.

President Donald Trump sought on Twitter Sunday to highlight the importance of the US alliance with China in the wake of North Korea's ballistic missile testing, adding the United States has "no choice" but to build up its military. China now only meets one of the criteria, according to the report: a large trade surplus with the US.

And although the administration's first report to Congress on the foreign exchange policies of USA trading partners continues the stance of the Obama administration, putting six countries with troublesome policies on a watch list, it takes a much tougher tone. "In its last analysis of the won, the IMF [International Monetary Fund] maintained its assessment that the won is undervalued".

But it is not easy for Taiwan to be removed from the monitoring list since the country is a small scale and open economy which tends to post a large current account surplus, the central bank said.

South Korea's foreign ministry said that by conducting the latest test just a day after showcasing a series of missiles, "North Korea has threatened the whole world".

Last year Mr Trump told his supporters in October that he would "force" China into negotiations, breaking tradition of past Presidents over the last two decades.

"China and Germany have been included in the list of the countries, whose currency manipulations will be observed by analysts of the TreasuryDepartment", they said.

"The best way to get China to cooperate with North Korea, is to be tough on them with trade, which is the number one thing Chinas government cares about", he said. However, the U.S. Treasury report noted that it will "scrutinize" China's trade and currency intervention practices. That's why the U.S. Treasury did not accuse Taiwan of persistent one-sided intervention.

The last time the US designated a country a currency cheater was China in 1994 under President Bill Clinton.

It also said that the United States remained poised to act if China did start to meddle with its currency, as it did in the not-too-distant past.

Korea was placed on watch lists after meeting the first two requirements previous year and is unlikely to be removed soon. "But the USA administration's focus on the trade deficit is something to keep an eye on", said Nobuyasu Atago, chief economist at Okasan Securities in Tokyo. Although the surplus has declined compared to the end of 2015, when it was $30.2 billion and the current account was 7.9 percent of the country's GDP, it still exceeds the threshold.

China only meets the first criteria by running over 20 billion USA dollars of trade surplus with the United States, said Zhu Jianfang, chief economist with the Citic Securities.

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