The US declined to brand China a currency manipulator, while asking the world\'s second-largest economy to strengthen the \"significantly undervalued\" yuan. In its semi-annual report to Congress on exchange-rate policies, the Treasury Department said on Friday that it will continue to \"closely monitor\" the pace of yuan appreciation and push for \"policy changes that yield greater exchange-rate flexibility.\" The Obama administration says China\'s policies keep the yuan undervalued and produce an unfair advantage in global trade. Politicians including presumptive Republican presidential nominee Romney and Senator Charles Schumer, a New York Democrat, have complained that the administration should be more aggressive in pushing China on the currency. No country has been designated a manipulator by the US since China in 1994. \"With recession in Eur-ope starting to slow China\'s economy, now is not the time to rock the boat with one of America\'s most important trading partners,\" Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said in an email after the report was released. \"Greater foreign-exchange rate flexibility and the need to monitor are going to be in this report for the next several years, but the nuclear option to declare China an outright manipulator is unlikely to be used with the global outlook so uncertain right now,\" Rupkey said. The Treasury said the Chinese yuan has appreciated 40 per cent against the dollar, after taking inflation into account, since China initiated currency reform in July 2005. This year through May 15 the Chinese currency was \"virtually flat\" against the dollar. \"It is in China\'s interest to allow the exchange rate to continue to appreciate, both against the dollar and against the currencies of its other major trading partners,\" the Treasury said in the report.