US clears China of currency manipulation
The US has decided not to declare China as having manipulated its currency to gain an unfair trade advantage.
The Treasury, however, did said that China's currency, the yuan, remains 'significantly undervalued' and urged the country to make further progress.
In its semi-annual report, the Treasury said that Beijing did not meet the criteria to be called a 'currency manipulator', which could have sparked US trade sanctions, the BBC reports.
"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 liberalise controls on capital movements, as part of a broader plan to move to a more flexible exchange rate regime," the Treasury said.
It, however, noted that there was more to do and that 'further appreciation' against the US dollar and other major currencies was 'warranted', the report said
The issue of whether China manipulates its currency is an important political issue and an ongoing source of tension between the world's two biggest economies, the report said.
According to the report, defeated US presidential candidate Mitt Romney had said he would have branded China a currency manipulator on his first day in office.
Twice a year, the Treasury gives a report to Congress on China's yuan policy.
Previous reports have also found China keeps the yuan undervalued, but have fallen short of calling China a currency manipulator, it added.