The US government said Thursday that China is not violating an American law against currency manipulation to gain unfair trade advantages.

In an annual report assessing the currency policies of major US trading partners, the US Treasury Department said China's decision to keep its currency tightly linked to the US dollar did not meet the "technical requirements" laid out in a 1988 law that sets forth economic sanctions that can be imposed for countries found to be in violation.

The finding came despite complaints from manufacturers in the United States that China's actions have played a major role in the loss of 2.7 million manufacturing jobs over the past three years.

Testifying in the US Congress on the report, US Treasury Secretary John Snow said the Bush administration would continue to keep up its diplomatic pressure on China to drop its tight peg to the dollar.

However, many US economists said the loss of manufacturing jobs in the country is the result of enhancing productivity which resulted in cutting jobs in the US factories other than the increasing imports from foreign countries.