The Obama administration announced that it has decided not to label China a currency manipulator in a semi-annual currency report released Thursday.

“Treasury has concluded that no major trading partner of the United States met the standards identified in Section 3004 of the Act,” the Treasury Department said in its semi-annual report sent to Congress on international economic and exchange rate policies.

The report noted that China’a announcement on June 19 to introduce more flexibility into the currency system is a “significant development.” (China Daily)

I am amused by this entirely expected announcement. My mirth stems from the reaction of some people following last month’s announcement by Beijing that the exchange rate system would be more flexible moving forward. On the very next day, the government announced that although the system was being liberalized, no one should expect any dramatic shifts in the value of China’s currency against the U.S. dollar. I wrote this at the time:

So what the hell just happened over the weekend, and why? Well, first, let’s all admit that China’s Saturday statement about “reform” and “flexibility” was vague and that all the celebratory comments in response were irresponsible.

I saw the announcement as a short-term move by Beijing to defuse possible criticism at the G20 meeting. That appears to have been a winning stratagem. The Treasury Report was another pressure point looming out there that could have been used, at least theoretically, by the Obama Administration as leverage.

I thought that the report would be delayed much longer, so while the result is unexpected, the timing is a bit surprising. From the outside, the relatively empty “reform” made by Beijing last month was brilliant, as they have sailed through the G20 and now gotten over, once again, this Treasury report hurdle.

All I can say is that I hope Obama got something in return for this latest move. Although I’m in support of the decision itself, you don’t want to give this type of thing away for free.