US asks China to fast-track reforms, refrain from devaluation

Ankara, September 5

As the world leaders expressed concern here over slowdown in China dragging down the global economic growth, the US Treasury Secretary Jacob Lew has told his Chinese counterpart to ensure that the currency is allowed to move freely as per market forces.

In a meeting with Chinese Finance Minister Lou Jiwei here at the G20, Lew said he was closely monitoring China’s recent economic policy actions, including the shift in its exchange rate regime.

Separately, Lew also met Japanese Deputy Prime Minister and Finance Minister Taro Aso here on the sidelines of the G20 Meeting of Finance Ministers and Central Bank Governors and spoke about the Joint Comprehensive Plan of Action.

Briefing about the meetings, a US Treasury Spokesperson said, Lew in his meeting with the Chinese minister discussed the outlook for the Chinese economy and recent developments in financial markets.

Lew emphasised on the importance of China accelerating its transition from export- and investment-led growth to a greater reliance on Chinese households and consumers, especially when global growth faces headwinds.

He said that continued progress on economic reforms would result in a stronger, more stable, and more balanced Chinese and global economy, which is in China and America’s interests.

“Secretary Lew underscored the importance of China carefully communicating its policy intentions and actions to the financial markets. Secretary Lew also emphasised the importance of China honouring its commitments to move in an orderly way towards a more market-determined exchange rate system and to increase the transparency of its exchange rate policies,” the spokesperson said.

The US Treasury Secretary said it was important for China to signal that it will allow market pressures to drive the RMB up as well as down, and that China should allow its exchange rate to reflect underlying fundamentals, avoid persistent exchange rate misalignments, and refrain from competitive devaluation.

Lew further told his Chinese counterpart that the upcoming visit by China’s President Xi Jinping to Washington later this month is an opportunity to make progress on issues vital to their economic relationship.

Interestingly, the G20 meeting is being held at a time when the world is concerned about the adverse impact of slowdown in China and the timing of a possible rate hike by the US Fed. It was being talked that a declaration of the ongoing meeting would ask the two countries to do the needful at their respective end, but the draft so far has stayed clear of both the issues.

In his meeting with Japanese Deputy Prime Minister, Lew discussed key issues before the G20 including the importance of global growth and financial stability.

He also discussed the importance of the Trans-Pacific Partnership Agreement, which will contribute to stronger and more balanced economic growth and encourage closer economic integration with Japan and throughout the TPP region.  The US Treasury Secretary said he was hopeful that TPP negotiations would conclude as soon as possible.

The two leaders discussed the need for exchange rate authorities to abide by their G7 and G20 commitments and remain in close contact. — PTI