WASHINGTON — The U.S. Treasury Department said Friday in its semiannual report on international economic and exchange rate polices of America’s major trading partners that China has taken enough steps to move toward a more market-determined exchange rate system and that it will not recommend the country be declared a currency manipulator.

Such a decision, which the Obama administration has opted not to take in multiple reports, could have led to punitive actions at the World Trade Organization.

“Based on the appreciation of the [yuan] against the dollar since June 2010, the balance of payments adjustment evidenced in the decline in China’s current account surplus and China’s commitments in the G-20 and [U.S.-China Strategic & Economic Dialogue] that it will move more rapidly to a more market-determined exchange rate system, Treasury has concluded that the standards” to determine whether a country is manipulating its currency to gain unfair trade advantages “have not been met with respect to China,” the Treasury report said.

However, the report noted that China’s currency remains “significantly undervalued and we believe further appreciation…against the dollar and other major currencies is warranted.”

The yuan has appreciated 8 percent against the dollar, and 12.5 percent on an inflation-adjusted basis, since China moved off its peg to the dollar in June 2010.

The report comes at a time when talk over China’s undervalued currency on Capitol Hill has diminished somewhat. The Senate passed legislation in October that could ultimately have led to punitive tariffs on Chinese imports, but House leaders refused to bring the bill to the floor for a vote, citing concerns that it would run afoul of WTO rules and ignite a trade war with China. Legislation has since remained stalled.

Treasury said it will closely monitor the pace of appreciation and press for policy changes leading to greater appreciation of the yuan, which would level the playing field and achieve a “sustained shift to domestic-demand led growth.”

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