By Vicki Needham - 11/27/12 10:11 PM EST
The Obama administration is coming under criticism from Sen. Charles Schumer for declaring that China is not a currency manipulator.
Following Tuesday's release of a report that again finds China is not keeping the value of its currency artificially low to cut the price of its exports to the United States, Schumer criticized the administration for avoiding penalties against China.
"The formal designation matters because there can be no penalties without it. It’s time for the Obama administration to rip off the band-aid, and force China to play by the same rules as all other countries."
Several senators joined Schumer in criticizing the decision.
“Unfortunately, this is no surprise," said Sen. Rob Portman (R-Ohio).
"The Obama administration has refused to take on China’s currency manipulation eight times. During this time of anemic economic growth, record-setting national debt and stubbornly high unemployment, we cannot afford to sit idly by as China refuses to play by the rules.”
Democratic Sen. Bob Casey (Pa.) said the report makes it clear that China is "cheating on its currency and stealing American jobs."
"However, once again, the administration failed to act," he said.
"The news that China is playing games with its currency should come as no surprise, but it should serve as a call to the Administration to finally label China a currency manipulator."
Sen. Orrin Hatch (R-Utah), the top Republican on the Senate Finance Committee, criticized the administration for not only failing to miss the deadline for the report "they’ve added insult to injury by failing to take it seriously."
"Given our large and growing trade imbalance with China, it is simply inexcusable for the White House to continually shirk its statutory obligations and refuse to take this issue head on," he said.
"The economic problems our country faces demand strong Presidential leadership. Ignoring critical trade issues and issuing late reports that are simply more of the same are a poor substitute.”
The timing of Tuesday's report was also notable because of the role China and trade played in the presidential election.
Treasury's report was supposed to come out in October but was delayed until after Election Day.
Republican presidential nominee Mitt Romney had sought to make China an issue in the race, criticizing Obama for not finding China manipulated its currency. He said he'd declare China a currency manipulator on his first day in office.
It its semi-annual report, Treasury found that while the Chinese currency remains undervalued, China has taken steps to reduce the level of official intervention in currency markets. The report concluded that China did not meet the standard necessary for Treasury to label it as a currency manipulator.
Treasury Departments under Obama and President George W. Bush have repeatedly found that China is not manipulating its currency to win a trade advantage.
Treasury did find that China's yuan "remains significantly undervalued" and further appreciation against the dollar and other currencies is "warranted."
From June 2010 through early November 2012, the yuan has appreciated by 9.3 percent against the dollar and 12.6 percent on a inflation-adjusted basis.
"Chinese authorities acknowledge the need for continued exchange rate reform, and have reaffirmed their commitment to move more rapidly toward a market-determined exchange rate," the report said.
More than a year ago, the Senate passed a currency manipulation bill that would punish China with higher tariffs for not allowing the yuan to appreciate at a faster rate. The House hasn't moved on the bill.
Obama has argued for increasing the dialogue with Chinese officials and continuing to press for changes, which he said has worked in the past few years.
Business groups have opposed any labeling of China as a currency manipulator, arguing it could lead to a wider economic war. They applauded Tuesday's decision.
"The Treasury Department once again made the right call on China's currency policy in its report to Congress," U.S.-China Business Council President John Frisbie in a statement.
"Labeling China a currency ‘manipulator’ would do little to help us reach the goal of a fully convertible currency and market-driven exchange rate for China."
Frisbie argued that the 'manipulator' label would only trigger negotiations, which the Treasury Department has been actively engaged in for some time with China.
"The upshot is that the exchange rate has little to do with the U.S. trade balance or employment, as we have said for some time," he said.
"We need to move on to more important issues with China, such as removing market access barriers and improving intellectual property protection.”
--This report was originally published at 5:11 p.m. and last updated at 7:43 p.m.