News / Economy

Market Access, Currency Value to Top US-China Dialogue

FILE - Treasury Secretary Jacob Lew
FILE - Treasury Secretary Jacob Lew
Victor Beattie

U.S. Treasury Secretary Jack Lew says the pace of economic reform and the need for further appreciation of China’s currency will be among the issues at next week’s (July 9, 10) Strategic and Economic Dialogue in Beijing.  Lew also does not see cyber-spying as an impediment to improving relations between the world’s top two economies.

Speaking Tuesday to the U.S.-China Business Council, Lew said he expects further progress at next week’s dialogue. He pointed to China’s commitment to open its economy more to outside investment and said that since 2010, China’s currency, the yuan (RMB), has appreciated 14 percent.

"It still needs to appreciate more, it’s still undervalued, and that is something that hurts Chinese consumers.  It reduces their purchasing power. One of the things that’s so important in terms of China’s economy is to increase consumer demand.  But, it’s fundamentally not fair in terms of trading practices, which is why we press on it so hard," said Lew.

Lew said this is a threshold issue that is fundamental to the trust between the two countries. An undervalued currency tends to boost Chinese exports and hurts foreign competition.

He said China has widened the trading band of its currency in recent weeks, but described progress as taking two steps forward and at least part of a step back in getting towards a market-determined exchange rate.

Gary Hufbauer of the Peterson Institute for International Economics sees U.S. demands for greater currency appreciation as a non-starter for China:

"China is tightening up credit. This is causing a bit of a slowdown in economic activity in China. Also, China has a major anti-corruption campaign. You see these generals being arrested, which is extending right down into the provinces, and that’s cutting back on the big projects in the provinces. One of the offsets that the Chinese government is doing to keep business going is to resist appreciation of the renminbi," said Hufbauer.

Lew said a market-determined exchange rate coupled with a more open Chinese economy will be good for the U.S. economy and American businesses’ ability to compete on a level playing field.

"Frankly, I think it’s in China’s interest.  If you look at China’s core economic plan, what they’ve put in their Third Plenum, the issues that I’ve just described are central to what they’ve adopted as their stated program.  So, that’s why I am optimistic we’ll continue to make progress," said Lew.

Lew said progress has been mixed after China’s announcement of the Shanghai free-trade zone.

"I think it’s been, you know, a slow process.  I think it started out with almost everything being put on the ‘closed’ list. Now, as things are taken off the ‘closed’ list, we’re finding that, just yesterday, a list came out, so we haven’t fully digested it.  But, on first glance, it doesn’t appear to be of major interest for U.S. market access. So, it seems to be items that give you a number of things that are open, but not a lot of business activity," said Lew.

The Shanghai free-trade zone is being viewed as a template for ongoing negotiations on a bilateral investment treaty (BIT).

Hufbauer said the slow pace of reform in China is due, in part, to efforts by China’s new leadership to consolidate its control over the country’s vast national and provincial economies.

Lew praised the Chinese for their focus on enforcement of intellectual property protection, but called for a more sustained, continuous efforts to establish so-called “rules of the road.”

Lew also hopes the discussion on cyber-security, especially in light of recent allegations of hacking by Chinese military personnel of U.S. corporate trade secrets, will continue.

"There is a fundamental difference that we do not view it as an acceptable practice for governmental entities to participate in the process of, you know, securing trade secrets for the economic benefit of firms in their country. And, we’ve made that clear in a general way. We’ve made it clear in a rather specific way. And, I don’t think there’s any question but it’s a source of some difference between us. We need to engage on that, and we need to continue to engage on that, and I believe that there will be ongoing discussions," said Lew.

China says it, too, is a victim of U.S. cyber-spying. Hufbauer says the Obama Administration is trying to make the distinction between commercial espionage and governmental spying.

The U.S. Treasury chief says China’s real estate market bubble does not likely pose a global threat to financial stability. He says the country has the tools necessary to manage it internally.

Hufbauer said that as the two sides sit down next week in Beijing, U.S./China economic ties are much stronger than bilateral geopolitical relations, where the two sides view each other more as competitors.

You May Like

Obama: Alaskans Feel Signs of Climate Change

They're seeing bigger storm surges as sea ice melts, more wildfires, erosion of glaciers, shorelines More

Katrina Brought Enduring Changes to New Orleans

The city’s recovery is the result of the people and culture the city is famous for, as well as newcomers and start-up industries More

Magical Photo Slides Show Native Americans in Late 1800s

Walter McClintock spent 20 years photographing the Blackfoot Indians and their vanishing culture at the dawn of the modern age More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Colombians Flee Venezuela as Border Crisis Escalatesi
X
August 27, 2015 2:08 AM
Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Colombians Flee Venezuela as Border Crisis Escalates

Hundreds of Colombians have fled Venezuela since last week, amid an escalating border crisis between the two countries. Last week, Venezuelan President Nicolas Maduro ordered the closure of a key border crossing after smugglers injured three Venezuelan soldiers and a civilian. The president also ordered the deportation of Colombians who are in Venezuela illegally. Zlatica Hoke reports.
Video

Video Is China's Economic Data Accurate?

Some investors say China's wild stock market gyrations have been made worse by worries about the reliability of that nation's economic data. And some critics say the reports can mislead investors by painting an unrealistically-strong picture of the economy. A key China scholar says Beijing is not fudging ((manipulating)) the numbers, but that the economy is evolving quickly from smoke-stack industries to services, and the ways of tracking new economic activity are falling behind the change. V
Video

Video Next to Iran, Climate at Forefront of Obama Agenda

President Barack Obama this week announced new initiatives aimed at making it easier for Americans to access renewable energy sources such as solar and wind. Obama is not slowing down when it comes to pushing through climate change measures, an issue he says is the greatest threat to the country’s national security. VOA correspondent Aru Pande has more from the White House.
Video

Video Shipping Containers Provide Experimental Housing

Housing prices around the San Francisco Bay area are out of reach for many people, so some young entrepreneurs, artists and tech industry workers are creating their own houses using converted shipping containers. But as VOA's Mike O’Sullivan reports from Oakland, the effort requires ingenuity and dealing with restrictive local laws.
Video

Video Arctic Draws International Competition for Oil

A new geopolitical “Great Game” is underway in earth’s northernmost region, the Arctic, where Russia has claimed a large area for resource development and President Barack Obama recently approved Shell Oil Company’s test-drilling project in an area under U.S. control. Greg Flakus reports.
Video

Video Philippine Maritime Police: Chinese Fishermen a Threat to Country’s Security

China and the Philippines both claim maritime rights in the South China Sea.  That includes the right to fish in those waters. Jason Strother reports on how the Philippines is catching Chinese nationals it says are illegal poachers. He has the story from Palawan province.
Video

Video Technique May Eliminate Drill-and-Fill Dental Care

Many people dread visiting dentists because they're afraid of drills. Now, however, a technology developed by a British firm promises to eliminate the need for mechanical cleaning of dental cavities by speeding a natural process of tooth repair. VOA’s George Putic reports.
Video

Video China's Spratly Island Building Said to Light Up the Night 'Like A City'

Southeast Asian countries claim China has illegally seized territory in the Spratly islands. It is especially a concern for a Philippine mayor who says Beijing is occupying parts of his municipality. Jason Strother reports from the capital of Palawan province, Puerto Princesa.
Video

Video Ages-old Ice Reveals Secrets of Climate Change

Ice caps don't just exist at the world's poles. There are also tropical ice caps, and the largest sits atop the Peruvian Andes - but it is melting, quickly, and may be gone within the next 20 years. George Putic reports scientists are now rushing to take samples to get at the valuable information about climate change locked in the ice.
Video

Video French Experiment in Integrating Roma Under Threat

Plans to destroy France’s oldest slum have sparked an outcry on the part of its Roma residents. As Lisa Bryant reports from the Paris suburb of La Courneuve, rights groups argue the community is a fledgling experiment on integrating Roma who are often outcasts in many parts of Europe.
Video

Video Kenyans Turn to Agriculture for Business

Each year Kenyan universities continue to churn out graduates for the job market despite the already existing high rate of unemployment among youth in the country. Some of these young men and women have realized that agriculture can be as rewarding as any other business or job, and they are resorting to agribusiness in large numbers as a way of tackling unemployment. Rael Ombuor reports for VOA.
Video

Video First Women Graduate Elite Army Ranger School

Two women are making history for the U.S. Army by proving they are among the toughest of the tough. VOA's Carla Babb reports from Fort Benning, Georgia as 94 men and those two women rise as graduates of the difficult Ranger school.

VOA Blogs

World Currencies

EUR
USD
0.8874
JPY
USD
120.83
GBP
USD
0.6497
CAD
USD
1.3271
INR
USD
66.162

Rates may not be current.