Trump-Xi Photograph:( Reuters )
President Donald Trump's administration said it made the change because China had agreed to refrain from devaluing its currency.
The Trump administration is planning to lift China's designation as a "currency manipulator", as leaders of the two economies get set to sign the phase 1 trade deal.
According to a report by Bloomberg, the US Treasury Department will take the step in a long-delayed semi-annual report to be released soon.
President Donald Trump's administration said it made the change because China had agreed to refrain from devaluing its currency to make its own goods cheaper for foreign buyers.
Meanwhile, the deal between Washington and Beijing is aimed at de-escalating the tit-for-tat tariff war the two countries have engaged in since 2018.
US Senate Democratic leader Chuck Schumer, a fierce critic of China's currency and trade practices attacked the Trump administration asserting that it effectively "backed down" from labelling China as a currency manipulator.
The US in August had accused Beijing of manipulating its currency after China let the yuan drop to its lowest point in more than a decade.
However, China's central bank denied it had intervened to weaken the yuan, and had said Washington's designation of China as a currency manipulator seriously harmed international rules.
Meanwhile, the yuan recently reached its five-month highs amid heavy demand ahead of this week's trade deal.