The United States on Friday placed 11 countries, including India, China, Japan, South Korea, Germany and Italy on the monetary practices watch list.
The other countries named by the Treasury Department in its quarterly report to Congress, the first under the Biden administration, are Ireland, Malaysia, Singapore, Thailand and Mexico.
All except Ireland and Mexico were covered in the December 2020 report, which fell under the previous Trump administration.
In accordance with instructions from Congress, the Treasury has established a monitoring list of major trading partners that deserve special attention in their monetary practices and macroeconomic policies.
An economy that meets two of the three criteria of the 2015 law is placed on the watchlist.
It is a persistent and one-sided intervention in the foreign exchange market that occurs when net purchases of foreign currency are made repeatedly, at least six out of 12 months, and these net purchases amount to at least 2% of domestic GDP. gross of an economy. Product (GDP) over a 12-month period.
As a further step, the Treasury will add and keep on the Watchlist any major trading partners of the United States that represent a large and disproportionate share of the overall United States trade deficit, even if that economy has not met its expectations. two of the three criteria of the 2015 law., It said.
In its report, the Treasury said a number of economies have carried out a persistent and unilateral intervention in the foreign exchange market.
“In the four quarters up to December 2020, five major US trading partners – Vietnam, Switzerland, Taiwan, India and Singapore – intervened in the forex market in a sustained and asymmetric manner with the effect of weakening their currencies, “he said. .
Three of these economies – Vietnam, Switzerland and Taiwan – have exceeded the other two thresholds set by the Treasury to identify potentially unfair exchange practices or excessive external imbalances, which could hamper U.S. growth or harm workers and businesses. Americans, according to the report.
According to the report, China’s economic growth in 2020 outpaced that of other major economies, but was driven by the rapid recovery in manufacturing and increased external demand, especially for medical supplies, personal protective equipment and electronic.
“Questions remain about the continued strength of China’s recovery in the absence of a sustained increase in household consumption. Although official data does not show a significant accumulation of foreign currency assets by the central bank, China’s failure to issue foreign exchange intervention and a wider lack of transparency on the main features of its exchange rate mechanism and the activities of state-owned banks warrant close monitoring of the development of the renminbi to the future, ”he said.
In the four quarters through December 2020, a number of economies experienced significant expansion in their current account surpluses as the pandemic significantly affected global trade, including China, Taiwan and Singapore, while others economies, notably Germany and Vietnam, maintained large current account surpluses. , which allowed the stock positions of external assets to widen further, he added.
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