Lawrence Summers, the former top economic adviser to U.S. President Barack Obama, said China’s yuan is no longer as undervalued as it was five years ago.
“The renminbi is not saliently, strikingly undervalued in the way it was five years ago,” Summers said today at the Asian Financial Forum in Hong Kong.
The comments are in line with tempered criticism from abroad of China’s control over its currency, even as the U.S. Treasury Department reiterated in November that the yuan “remains significantly undervalued.” The yuan has appreciated about 17 percent against the dollar since the end of 2007.
China “has substantially reduced the level of official intervention in exchange markets since the third quarter of 2011,” the Treasury said in a statement accompanying its semi-annual currency report to Congress in November.
Summers, a Harvard University professor and former president of the school, was Obama’s adviser from 2009-10 and served as Treasury secretary from 1999-2001.
Speaking with reporters after his address, Summers said China is a “very, very long time away” from having an open, deep international market for the yuan. It will take a long time for the currency to expand its role enough to alter the dollar’s role in the international market, he said.
The International Monetary Fund in July repeated an assessment that the yuan was “moderately” undervalued while omitting a previous estimate of the magnitude of the gap. China disputed the assessment and said the yuan was “now close to equilibrium or, at most, slightly undervalued,” according to an IMF report.
U.S. Treasury Secretary Timothy F. Geithner said in May that further appreciation in the yuan is important to aid a reshaping of China’s economy as significant as the nation’s opening of its markets in the 1970s.
Summers also said U.S. gross domestic product growth was probably about 1 percent last quarter. The median estimate of analysts surveyed this month by Bloomberg News was for an annualized rate of 1.5 percent.