July 10 (Bloomberg) -- U.S. Treasury Secretary Jacob J. Lew urged China to make good on pledges to open its economy to competition and adopt more flexible exchange and interest rates, as talks between the two nations started in Washington today.
“I will encourage China to follow through decisively on the important commitments it has made to transition to a more balanced and sustainable pattern of growth,” said Lew, who is co-hosting the two-day U.S.-China Strategic and Economic Dialogue with Secretary of State John Kerry. “This transition will be critical to China’s success, and it will be consequential to the world economy.”
China was scheduled to be represented by Vice Premier Wang Yang and State Councilor Yang Jiechi.
China has introduced initiatives to increase domestic consumption, make growth more energy efficient and encourage investment in poorer inland provinces after the economy more than doubled in the past five years as the wealth divide widened. It has also allowed its currency, the yuan, to appreciate in recent years as lawmakers in the U.S. complain that restraints on its rise unfairly benefit Chinese exporters.
“These reforms recognize the imperative of shifting to domestic consumption, greater private sector innovation, an economy that is more open to competition with more flexible prices -- including the exchange rate and interest rates, and a more efficient financial system,” Lew said today.
While the U.S. priority is to grow its economy and create middle-class jobs, China will need to undergo “significant and fundamental shifts in policy,” to sustain growth in the future, Lew said.
The U.S. economy is “poised for continued strong and broad-based growth,” he said. “What matters is ensuring that our economies are growing in a way that is balanced, beneficial and mutually compatible.”
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