China accuses US of 'deliberately destroying' world order

US law sets out three criteria for identifying manipulation among major trading partners: a material global current account surplus, a significant bilateral trade surplus with the United States, and persistent one-way intervention in foreign exchange markets.

After determining a country is a manipulator, the treasury is required to demand special talks aimed at correcting an undervalued currency, with penalties such as exclusion from US government procurement contracts.

The US treasury designated Taiwan and South Korea as currency manipulators in 1988, the year that Congress enacted the currency review law. China was last designated a currency manipulator under the Clinton administration in 1994.

In May, the treasury refrained from declaring China a currency manipulator based on new, tougher criteria measuring a country’s global current account surplus, along with persistent one-way intervention and a large bilateral trade surplus with the US.

In the report, however, the treasury kept China on an enhanced monitoring list due to a “misalignment and undervaluation of the RMB relative to the dollar”.

Also on Tuesday, Beijing also warned that all “counter measures” were “on the table” if the US placed intermediate-range ground missiles in the region. The US defence secretary, Mark Esper, said on Saturday that he was in favour of putting such missiles in Asia soon.

Fu Cong, of China’s foreign ministry, warned China’s neighbours, including Japan, South Korea and Australia, not to allow the US deployment in their territory. Fu said: “If the US deploys missiles in this part of the world, at the doorstep of China, China will be forced to take countermeasures.”