The Treasury Department on Wednesday declined to name China a currency manipulator, backing down from tough talk last year when Barack Obama, then campaigning for president, said Beijing was keeping its currency unfairly low.

In its semiannual report to Congress on currency practices of key trade partners, the Treasury noted that all were suffering from the current global economic downturn but said none were manipulating their currencies for trade advantage.

While the Treasury said it remains of the view that the yuan is undervalued, as shown by China's huge trade surpluses and foreign exchange reserves, it did not estimate how much the yuan, also called the renminbi, was undervalued.

In a bow to business groups and politicians who remain critical of Beijing's currency practices, the Treasury said it will keep pressing Chinese authorities at every turn to allow more exchange rate flexibility and to take steps to spur domestic demand.

At a briefing, a senior Treasury official said the White House and the International monetary fund were consulted during preparation of the report. He noted that current global economic conditions were much bleaker now than has been the case for the past decade when U.S. anger at alleged China currency manipulation was on the rise.

The financial crisis has really changed the context. We're looking at a global recession, the official said.

Last year, Obama told the Ohio Conference on Fair Trade that currency manipulation by China gave it an unfair trade advantage that cost American jobs and vowed to take a harder line.

The Bush administration has utterly failed to address this growing threat to U.S. business, Obama said. I am committed to tackling this problem and ensuring that all trade manipulations are addressed by the U.S. government.

But in the 52-page currency report, Treasury said Beijing has allowed the yuan to appreciate 16.6 percent between June 2008 and February 2009 and that, as the financial crisis intensified, the yuan appreciated slightly against the dollar.

In addition, Treasury said China has put in place a large fiscal stimulus program, second in size only to the United States, and said that should act as a spur to domestic demand that will help rebalance global growth.

Notwithstanding that, we still believe the renminbi (or yuan) is undervalued and further adjustment is necessary, the Treasury official said.

We're not satisfied with the slight movement against the dollar in recent months.

(Reporting by Glenn Somerville and Doug Palmer, Editing by Chizu Nomiyama)