U.S. Treasury Secretary Jacob J. Lew said he will call on Chinese leaders to let markets determine the value of the yuan and to avoid postponing measures to overhaul their economy even as growth falters.
“They obviously have to worry about their short-term economic situation,” Lew said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. “What they can’t do is treat the long-term reforms as something they can just put off. They need to be serious about it.”
Lew, who will meet with Chinese officials May 13 in Beijing, said that while China has made some progress in loosening restrictions on its currency, “we’ve seen some very negative movement in the exchange rate in recent months.”
Lew said he’s been telling his counterparts to avoid becoming an alternative source of funding to Russia as U.S. sanctions begin to bite.
“We’ve been making the case consistently, wherever we go, that it’s unacceptable for Russia to violate Ukraine’s sovereignty,” he said. “And that when we take actions and other countries in the world take action, it is important for there not to be backfill.”
Russian President Vladimir Putin plans to open the door to Chinese money as U.S. and European sanctions over Ukraine threaten to tip the economy into recession, two senior government officials said.
The move would roll back informal limits on Chinese investment as Russia seeks to stimulate growth, said the officials, who have direct knowledge of talks and asked not to be identified because the information isn’t public.
On the strategy for imposing sanctions against Russia, Lew said the administration has “made very clear that our goal is not to go to the maximum degree that one can to hurt the Russian economy. It’s to get President Putin to change Russia’s policy.”
“We have been moving step by step and in a very surgical way,” he said. “The goal here is not to hurt the European economy, the American economy. It’s not to hurt the Russian people.”
While U.S. officials have discussed targeting entire sectors of the Russian economy, such as energy and finance, they have so far only applied sanctions against 45 individuals, including OAO Rosneft Chief Executive Officer Igor Sechin, and 19 entities, including SMP Bank and Bank Rossiya.
Lew said he’s seeking changes in China that will allow U.S. companies to sell their products and services on a “level playing field.”
China’s economy expanded 7.4 percent in the first quarter, the least in almost two years. General Motors Co., which sells more cars in China than anywhere else, reported deliveries there increased 6.3 percent last month, the slowest pace in 14 months.
The yuan has fallen 2.8 percent this year after gaining 3 percent last year. It fell to an intraday low of 6.2676 per dollar on April 30, the weakest since October 2012, according to data compiled by China Foreign Exchange Trade System, and closed at 6.228 per dollar yesterday.
To contact the editors responsible for this story: Chris Wellisz at email@example.com