The US labeled China a currency manipulator in 1994—and bestowed the same designation on it 25 years later. The move, which the AP brands as "unexpected," was made by the Treasury Department and comes after China let the yuan weaken to an 11-year low on Monday, a development that sent the Dow crashing down 767 points. The Wall Street Journal reports the "mostly symbolic" move means the US must now work with the International Monetary Fund on the issue. Indeed, NPR quotes a Treasury statement as saying the Treasury secretary will now coordinate efforts with the IMF "to eliminate the unfair competitive advantage created by China's latest actions."
The Treasury Department as recently as May said China didn't fit the criteria of a currency manipulator. In Monday's about-face, it struck at China's explanations for the currency moves it has made lately as improbable and said the explainers "confirm that the purpose of China's currency devaluation is to gain unfair competitive advantage in international trade." The AP reports the country's central bank establishes a daily exchange rate in the morning; the yuan can then fluctuate by 2% against the dollar during the day. A senior fellow at the Peterson Institute for International Economics says the setting of the exchange rate allows for this view: "Any move is a move they want. Therefore, a move down is a manipulation." (Read more China stories.)