U.S. Treasury Secretary Jacob J. Lew said he pressed China’s new leadership on cybersecurity, North Korea and exchange rates, as both sides pledged to cooperate to support domestic and global growth.
“The dominant economic theme was what can be done to generate more domestic demand and more growth,” Lew told reporters after a two-day trip to Beijing. “It was clear from the discussions that China has made a serious commitment to their reform agenda. The challenge will be to drive forward toward material progress.”
A market-determined yuan is in each nation’s interest, and “they recognize the need to do it for internal reasons as well,” Lew said. China’s leaders asked for time to let their domestic policies work, an administration official said. The fiscal crisis in Cyprus was discussed and was in the background of Lew’s visit, said the official, who spoke on condition of anonymity to characterize private talks.
On his first foreign trip as secretary, Lew juggled meetings with new leaders of the world’s second-largest economy while monitoring events in Cyprus, whose $18 billion-euro ($23 billion) gross domestic product is about half the size of Rhode Island’s. President Barack Obama’s former chief of staff hadn’t yet landed in Beijing before the turmoil drew his attention from the issues of cyber-espionage, North Korea’s nuclear threat and currency values that topped his China agenda.
Balancing the China visit with events in Cyprus is “something of a welcome-to-the-Treasury moment” for Lew, said Clay Lowery, a vice president at Washington-based Rock Creek Global Advisors LLC and former assistant Treasury secretary for international affairs during the George W. Bush administration.
“You think you’re worrying about the budget, the deficit, the debt ceiling, financial regulation,” Lowery said. “And then a small country like Cyprus comes up with a lot of implications. But as former chief of staff, he’s used to dealing with a lot of issues at the same time.”
While Lew was en route to Beijing, the Treasury Department released a statement on Cyprus calling for a “responsible and fair” resolution after a proposed tax on Cypriot bank deposits unsettled financial markets worldwide.
Cyprus wasn’t a top global issue when Lew was preparing to take office last month, Lowery said. The Mediterranean island country wasn’t mentioned during Lew’s three-hour Senate confirmation hearing Feb. 13. He took office Feb. 28.
Lew’s predecessor, Timothy F. Geithner, was an undersecretary for international affairs and an International Monetary Fund official before becoming Treasury chief. “So it was presumed that he was in touch with everybody” on the European debt crisis, said Edwin Truman, a Treasury international official under Geithner during the Bill Clinton administration.
By making a statement on Cyprus while Lew was traveling to China, the Treasury was sending a “signal that Secretary Lew is in charge,” said Truman, a senior fellow at the Peterson Institute for International Economics in Washington.
Today’s meeting with Chinese Premier Li Keqiang took place in the Purple Light Pavilion in Zhongnanhai, the Communist Party’s leadership compound next to the Forbidden City in central Beijing. Lew met yesterday with President Xi Jinping in the Great Hall of the People, site of this month’s once-in-a-decade power handover within the party.
On cyber attacks, Lew said “there was no mistaking how seriously we take this issue” and both nations share a goal of a denuclearized Korean peninsula.
“We made clear that the U.S. views the provocative actions of North Korea as very serious and we will continue to pursue methods available to change the policy perspective in Pyongyang,” Lew said.
Lew also held talks today with Wang Qishan, according to a Treasury official who asked not to be identified. Wang is a member of the paramount Politburo Standing Committee who was previously the vice premier overseeing finance, which made him the counterpart to the U.S. Treasury secretary.
China may decide soon who will be its chief representative at the Strategic & Economic Dialogue talks with the U.S., according to the U.S. official. Wang has previously served as the main representative.
The Treasury chief met yesterday with National Development and Reform Commission Chairman Xu Shaoshi and Finance Minister Lou Jiwei and today with People’s Bank of China Governor Zhou Xiaochuan.
Earlier today, Lew met with executives from U.S. companies including General Electric Co., United Parcel Service Inc. and Ford Motor Co., according to the Treasury official. The executives said priorities included protecting trade secrets, cybersecurity, energy development and challenges in market access in China, the official said.
Xi, 59, succeeded Hu Jintao as party chief in November and replaced him as president March 14. The next day, Li, 57, became head of government as premier, following his appointment as the party’s No. 2 official in November.