"Their currency is more of a controlled currency than other markets that are free access," Mnuchin told CNBC. "But if they go in and support their currency, that is not currency manipulation."
"If they [China] let their currency weaken, either for structural reasons or for actual manipulation, that is something that is manipulation," he added in the interview on "Squawk Box."
But the yuan, also called the renminbi, firmed against the dollar for the third straight session Tuesday after the Chinese central bank moved to put a floor under it.
The yuan had been weakening against the dollar due to escalating trade tensions and rising interest rates in the U.S., which is driving up the value of the dollar.
Last month, Mnuchin told CNBC he was "closely monitoring" the yuan.
He has said the weakness would be reviewed as part of the Treasury's semi-annual report on currency manipulation. The report, due Oct. 15, will be based on activity for the first six months of 2018.
However, Mnuchin said Tuesday there are other pressing issues with Beijing besides currency. He said if China were to sign on to the same type of agreement as Mexico, the U.S. would "have no problems." The U.S. and Mexico struck a trade deal Monday that paved the way to replace NAFTA, the current agreement between the two nations and Canada.
In the interview, Mnuchin laid out the Trump administration's case for pursuing trade actions against China. "We need to make sure our technology is protected, we need to make sure our companies aren't forced into joint ventures, and we need to make sure we have fair market access," he said.
The Trump administration is attacking what it sees as unfair trade on a number of fronts. A new round of U.S. tariffs on $16 billion worth of Chinese imports kicked in Thursday, prompting an equivalent retaliation from Beijing.
— Reuters contributed to this report.