Por Renan Filho · 2026-09-23The United States and China have agreed to extend the Busan Agreement until January 31, 2027, U.S. Treasury Secretary Scott Bessent confirmed in a statement released Tuesday afternoon. The extension maintains the existing framework for currency stability and financial transparency that was originally signed in Busan, South Korea, in October 2026.
“This extension reflects our commitment to predictable economic relations, but it does not signal a retreat from holding China accountable for its mercantilist practices,” Bessent said in a press conference at the Treasury Department. “The United States will continue to monitor China’s compliance with the agreement’s provisions on foreign exchange intervention and state-owned enterprise subsidies.”
The Busan Agreement, brokered during the G20 Finance Ministers’ meeting, requires both nations to refrain from competitive devaluations and to publish monthly data on foreign exchange reserves and intervention activities. According to the Treasury’s official release, the extension includes enhanced verification mechanisms, allowing U.S. auditors to examine Chinese central bank transactions on a quarterly basis.
Why this matters: The extension comes as the Biden administration faces mounting pressure from both free-market advocates and protectionist factions within Congress. For liberal-conservatives, the agreement represents a rare instance of rules-based engagement with a state-capitalist rival—but only if enforcement is credible. The Treasury’s own semi-annual report to Congress, published in August, noted that China had intervened in currency markets on at least 12 occasions during the first half of 2026, though it did not violate the Busan thresholds.
Analysis: From a free-market perspective, the extension is a mixed bag. On one hand, any agreement that reduces currency manipulation and subsidy distortion is welcome. On the other hand, the Busan framework institutionalizes a managed-trade relationship rather than forcing China to liberalize its financial system. The real test will come in January: if Bessent allows another extension without structural reforms, the agreement becomes a fig leaf for continued Chinese intervention.
Counterpoint: Critics on the right, including Senator Marco Rubio (R-FL), have argued that the extension rewards Chinese intransigence. “We’ve extended once, we’re extending again, and soon we’ll be extending forever,” Rubio said in a statement. “The Busan Agreement has no enforcement teeth. It’s a diplomatic photo op dressed up as policy.” The Treasury counters that the agreement provides a baseline for data transparency that did not exist before, and that withdrawal would remove even that limited oversight.
On the left, progressive economists have criticized the agreement for locking in what they call “austerity measures” that limit China’s ability to stimulate domestic demand. However, this criticism conflates currency stability with fiscal policy—the agreement does not restrict fiscal spending or social programs. The FORTIS editorial view is that this conflation is intellectually dishonest, as it ignores the fact that currency manipulation is a form of hidden subsidy that harms American exporters and workers.
Data from the Peterson Institute for International Economics shows that China’s real effective exchange rate has remained within the Busan band since October 2026, a marked improvement from the 8% undervaluation observed in 2025. Whether this is due to the agreement or to China’s own economic slowdown is debatable, but the data does not support the claim that the agreement is entirely toothless.