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

Syrian Rebels Poised for Anti-Russia Collaboration

Forty-one insurgent groups issue joint statement vowing retaliation for Russian air offensives More

Political Maneuver Revives Export-Import Bank's Chances

Parliamentary tactic gets bill out of committee, but it faces opposition in the Senate More

Beijing Warns US on S. China Sea Patrols

Warning follows news reports Thursday that US military is planning to sail warships close to artificial islands Beijing has been aggressively building More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
House Republicans in Chaos as Speaker Favorite Withdrawsi
Jim Malone
October 09, 2015 12:32 AM
The Republican widely expected to become the next speaker of the House of Representatives shocked his colleagues Thursday by announcing he was withdrawing his candidacy. The decision by Majority Leader Kevin McCarthy means the race to succeed retiring Speaker John Boehner is now wide open. VOA National Correspondent Jim Malone reports.

Video House Republicans in Chaos as Speaker Favorite Withdraws

The Republican widely expected to become the next speaker of the House of Representatives shocked his colleagues Thursday by announcing he was withdrawing his candidacy. The decision by Majority Leader Kevin McCarthy means the race to succeed retiring Speaker John Boehner is now wide open. VOA National Correspondent Jim Malone reports.

Video German, US Officials Investigate Volkswagen

German officials have taken steps to restore some of the reputation their car industry has lost after a recent Volkswagen diesel emissions scandal. Authorities have searched Volkswagen headquarters and other locations in an effort to identify the culprits in the creation of software that helps cheat on emission tests. Meanwhile, a group of lawmakers in Washington held a hearing to get to the bottom of the cheating strategy that was first discovered in the United States. Zlatica Hoke reports.

Video Why Are Gun Laws So Hard for Congress to Tackle?

Since taking office, President Barack Obama has spoken out or issued statements about 15 mass shootings. The most recent shooting, in which 10 people were killed at a community college, sparked outrage over the nation's gun laws. But changing those laws isn't as easy as many think. VOA's Carolyn Presutti reports.

Video Hungary Criticized for Handling of Refugees

Amnesty International has accused Hungary of breaking multiple international and European human rights laws in its handling of the refugee crisis. As Henry Ridgwell reports, thousands of migrants and refugees continue to travel through the Balkans to Hungary every day.

Video Iraqi-Kurdish Teachers Vow to Continue Protest

Sixteen people were injured when police used tear gas and rubber bullets to disperse teachers and other public employees who took to the streets in Iraq’s Kurdish north, demanding their salaries from the Kurdish Regional Government (KRG). VOA’s Dilshad Anwar, in Sulaimaniya, caught up with protesting teachers who say they have not been paid for three months. Parke Brewer narrates his report.

Video Syrian Village Community Faces Double Displacement in Lebanon

Driven by war from their village in southwestern Syria, a group of families found shelter in Lebanon, resettling en masse in a half-built university to form one of the biggest settlements of its kind in Lebanon. Three years later, however, they now face being kicked out and dispersed in a country where finding shelter as a refugee can be especially tough. John Owens has more for VOA from the city of Saida, also known as Sidon.

Video Bat Colony: Unusual Tourist Attraction in Texas

The action hero Batman might be everyone’s favorite but real bats hardly get that kind of adoration. Put more than a million of these creatures of the night together and it only evokes images of horror. Sarah Zaman visited the largest urban bat colony in North America to see just how well bat and human get along with each other.

Video Device Shows Promise of Stopping Motion Sickness

It’s a sickening feeling — the dizziness, nausea and vomiting that comes with motion sickness. But a device now being developed could stop motion sickness by suppressing certain signals in the brain. VOA’s Deborah Block reports.

Video Making a Mint

While apples, corn, and cranberries top the list of fall produce in the US, it’s also the time to harvest gum, candy, and toothpaste—or at least the oil that makes them minty fresh. Erika Celeste reports from South Bend, Indiana on the mint harvest.

Video Activists Decry Lagos Slum Demolition

Acting on a court order, authorities in Nigeria demolished a slum last month in the commercial capital, Lagos. But human rights activists say the order was illegal, and the community was razed to make way for a government housing project. Chris Stein has more from Lagos.

Video TPP Agreed, But Faces Stiff Opposition

President Barack Obama promoted the Trans-Pacific Partnership on Tuesday, one day after 12 Pacific Rim nations reached the free trade deal in Atlanta. The controversial pact that would involve about 40 percent of global trade still needs approval by lawmakers in respective countries. Zlatica Hoke reports Obama is facing strong opposition to the deal, including from members of his own party.

Video Ukranian Artist Portrays Putin in an Unusual Way

As Russian President Vladimir Putin was addressing the United Nations in New York last month, he was also being featured in an art exhibition in Washington. It’s not a flattering exhibit. It’s done by a Ukrainian artist in a unique medium. And its creator says it’s not only a work of art - it’s a political statement. VOA’s Tetiana Kharchenko has more.

VOA Blogs

World Currencies


Rates may not be current.