U.S. Treasury Secretary Jacob J. Lew reiterated calls for China to welcome foreign investment, contribute to a “level playing field” in global trade, and disclose when and why it intervenes in currency markets.
Lew is in Beijing this week in part to press China to pursue a more market-determined exchange rate, as the U.S. argues that less government control would drive the yuan higher against the dollar. While Lew praised yuan gains since 2010, he questioned in an interview broadcast today why it’s been allowed to weaken in the past year.
“China needs a market-determined exchange rate, it’s something the government has committed to in its own policy statements and it is an important part of our conversations,” Lew said in an interview for CCTV America, the U.S. production center of China Central Television. “The first step would be transparency -- if it was clear when the government was intervening and why -- that would help quite a lot.”
After almost uninterrupted annual gains since 2005 that saw the yuan strengthen 33 percent versus the dollar, speculators had come to see China’s currency as a one-way trade, leaving the world’s second-largest economy vulnerable to a sudden shift in investor sentiment.
The People’s Bank of China bought dollars to weaken the yuan, boosting its foreign reserves by $127 billion in the first quarter to a record $3.9 trillion. That led to the yuan declining 2.4 percent against the dollar so far this year.
Lew arrives in Beijing today for talks with Chinese leaders as a part of the annual U.S.-China Strategic and Economic Dialogue July 9-10.
“Our markets are very open; we welcome investment,” Lew said in the interview, according to a CCTV America transcript. “We look forward to having opportunities for U.S. businesses to participate and contribute to China’s economy.”
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