In a goodwill gesture before the signing of the "phase one" trade deal between China and the United States, scheduled to take place in Washington on Wednesday, the US Treasury Department announced on Monday that it no longer considers China to be a currency manipulator. This comes five months after it designated the country as such at the height of trade tensions between the world's two largest economies.

The latest move, welcome as it is, is not a favor done to China by the US, though, because China should not have been slapped with the discriminatory label to begin with.

The country is committed to keeping the yuan's exchange rate basically stable, at what the People's Bank of China, the central bank, calls "a reasonable and balanced level", and it has never resorted to competitive devaluation to gain an edge when conducting trade activities with any other country, nor used its currency as a tool in the trade dispute.

Actually, rather than being undervalued as the US claimed, the Chinese currency has substantially increased in value against the US dollar since 2005, and remained one of the strongest among the G20 currencies in relation to the dollar.

The International Monetary Fund stated in a report in August 2019 that the yuan's valuation was largely in line with China's economic fundamentals.

Even based on criteria unilaterally set by the US in 2015 for it to label a country as a currency manipulator, China only meets one of them — a large trade surplus with the US. And that, as trade experts have said, is largely the result of globalization, with China and the US playing different roles in the international value chain, among some other factors such as the US ban on high-tech exports to China.

Yet it is never too late to come to its senses. The 18-month trade conflict between China and the US proves that the maximum pressure approach of the US, whether on the tariff front or the currency front, will not serve either side any good.

There have been reports that China and the US have agreed to resume their long stalled semi-annual talks aimed at resolving their disputes. Bilateral relations have been seriously marred by tit-for-tat trade blows after the first round of what the US administration renamed the Comprehensive Economic Dialogue was held in July 2017.

Hopefully, the dropping of the currency manipulator label, as well as the preliminary trade agreement, will mark a new beginning for their relationship.

Consultations based on the principle of equality and mutual respect are the only way forward for the two countries to solve their disputes.

It is encouraging that the two countries now seem to be doing that.