US says China yuan undervalued, but not manipulated

* US Treasury says China yuan “substantially undervalued”

* US-China Business Council says backs Treasury decision

* Analyst says currency report becoming a “minor joke” (Adds quotes from report)

By Doug Palmer

WASHINGTON, May 27 (Reuters) – The U.S. Treasury Department ruled on Friday China was not manipulating its currency to gain an unfair trade advantage, but said Beijing still needs to allow the yuan to rise much faster in value.

Although the Obama administration has often used blunt language to warn China over its currency practices, the semiannual report issued by Treasury on Friday maintained its practice of avoiding the harsher step of naming it a currency manipulator.

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