The Department of the Treasury has again declined to label China a currency manipulator. This will ruffle some feathers on the Congress, labor groups, certain industries, and some plain ol’ regular Americans. Those with ruffled feathers can make good points but Treasury is still right to have done nothing.

There are definitely weaknesses in the justification given for doing nothing. Treasury cites the PRC’s stimulus package as helping the situation when the stimulus is just more of what China has been doing the past six years to create its gigantic trade surplus.

Treasury’s best point is that China’s currency, the yuan, has actually climbed a fair amount. It has, it just hasn’t budged against the dollar since last June. A few months before the financial crisis erupted, China tightened the peg of the yuan to the dollar. There are reasons not to like countries pegging to the dollar but, if we cite the PRC for doing it, we’re going to have to cite a whole flock of other countries, as well.

This ties to Treasury’s real motivation: now is not the time to rock the boat. Large economies, including both the U.S. and PRC, have already taken small, dangerous steps toward protectionism (in China’s case they were pretty far down the protectionist road, already). Because the U.S. is by far the world’s most important economy, what we do can trigger the kind of trade conflict that made the Great Depression much worse. That risk trumps the fact that Beijing won’t let the yuan rise against the dollar.

I don’t mean to make a bad day worse for those hoping for strong action against China but, even when the world economy does get better, calling the PRC a currency manipulator will still miss the point. The yuan rose almost 20% against the dollar over three years and our bilateral trade deficit just went up and up.

What Beijing is doing to subvert the market and intervene in trade and investment is much more complicated than pegging to the dollar. When the global economy stabilizes and the U.S. restarts meaningful economic dialogue with the PRC, America should be pointing at lending by state banks, China’s anti-monopoly law, and other messy but more important things.