The decision was expected after President Donald Trump this week reversed himself and said China was not a currency manipulator, according to AFP.
Like Korea, China was not labeled a currency manipulator.
Friendly relations with China is also crucial as Trump tries to tackle the troublesome North Korea.
Trump may have been boxed in his campaign promises to go after China on trade and currency, and the reality of needing China's help on regional security problems, said Senator Jack Reed, Democrat of Rhode Island, also on NBC.
"Taiwan has a track record of asymmetric foreign-exchange interventions, highlighting the urgency of the authorities limiting foreign-exchange intervention only to circumstances of disorderly exchange-market conditions and making foreign-exchange operations more transparent", the report said.
But reflecting the views of most economists, Treasury concluded that China has recently been intervening to do the opposite - to keep the renminbi from falling against the dollar and other currencies.
He said the United States was working with the Chinese leadership to "develop a range of options". It said the distortion imposed significant and long-lasting hardship on United States workers and companies. Just days ago, Trump declined to label China a currency manipulator something he previously promised to do.
The report came after China data showed its surplus with the USA was almost unchanged in the first quarter compared to a year earlier at $49.6 billion, and cited China's market protection as an impediment to a balanced trade relationship. Its surplus with the United States totaled $65 billion previous year.
The report said the Korean government needs to enhance the flexibility of the exchange rate and the USA will continue to monitor the government's intervention.
Mr. Trump tweeted after his meeting with Chinese President Xi Jinping this month that "I have great confidence that China will properly deal with North Korea".
"Expanding trade in a way that is freer and fairer for all Americans requires that other economies avoid unfair currency practices, and we will continue to monitor this carefully", said Treasury Secretary Steven Mnuchin.
In an interview Sunday on ABC's "This Week", McMaster said President Donald Trump had directed the National Security Council to collaborate with the Defense and State Departments, and intelligence agencies to "provide options and have them ready for him if this pattern of destabilizing behavior continues". Trump said on Twitter.
"Additionally, U.S. Department of the Treasury established a "Monitoring List" of major trading partners that merit close attention to their currency practices".
Pence will meet with Japan's Deputy Prime Minister Taro Aso on Tuesday, kicking off talks in Tokyo that the White House hopes will open doors in Japan for US -made products and attract Japanese investment for infrastructure projects in the United States.
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