The move was expected as Trump earlier this week had said that China was not a currency manipulator.
Days after Trump's meeting with President Xi Jinping, Trump tweeted that Beijing would get a better trade deal with Washington if it helped resolve the USA problem with Pyongyang. As he said in his tweet, "We will see what happens".
The comment on Twitter was the first from Trump since North Korea's latest missile launch.
Commerce Secretary Wilbur Ross has said that the issue of "currency misalignment" - which could also include unintentional devaluations - will be addressed in a study of trade abuses by nations that run large surpluses with the US, which is due to be ready in June. "So I haven't held back", Trump said.
The type of missile was not clear.
Korea's current account relative to GDP was the fourth highest after Taiwan's 13.4 percent, Switzerland's 10.7 percent and Germany's 8.3 percent.
DESPITE fears of a showdown between the United States and North Korea, analysts by and large believe that, barring accidents, sabre-rattling will yield to pragmatism.
A political panel on "Face the Nation" Sunday, April 16, discusses what's next for President Donald Trump's foreign policy stance.
"The new administration is still working through its thinking", said Sheets. At the same time, the president also sees China as essential for resolving the North Korea problem that has puzzled world leaders for decades.More news: Syria's Assad says Idlib chemical attack 'fabrication' - AFP interview
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Trump's policy reversal on China sends a signal to global finance chiefs ahead of next week's meeting in Washington, D.C., that Trump could soften the aggressive trade positions he staked out during his campaign.
Treasury said it will be scrutinising China's trade and currency practices very closely, especially in light of the extremely sizable bilateral trade surplus that China has with the United States.
The worst scenario is if the United States faces a binary choice between acquiescence to North Korea's nuclear and missile programme, and the use of military force to stop it, Scott Snyder, senior fellow for Korea studies at the Council for Foreign Relations in Washington, told The Straits Times.
But a White House foreign policy adviser travelling with Pence played down Sunday's test, saying the missile - probably a medium-range one - failed after about four to five seconds.
The two leaders also had a telephonic call on Wednesday, when they discussed the situations in North Korea and Syria. But the US Treasury concluded China was doing the opposite, preventing its yuan from falling against the dollar and other currencies.
"We'd rather be talking than having a trade war".
Recent satellite images suggest its main nuclear site is "primed and ready", according to specialist U.S. website 38North, and White House officials say military options are already being assessed.
On Friday, China's Foreign Minister Wang Yi warned that "conflict could break out at any moment", adding that if war occurred, there could be no victor.
Pyongyang has carried out five nuclear tests - two of them previous year - and multiple missile launches.