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

Video Obama Announces Plan to Send 3,000 Troops to Liberia in Ebola Fight

At US Centers for Disease Control and Prevention, Obama details troop deployment and other pieces of US plan More

Video China Muslims Work to Change Perceptions After Knife Attacks

Muslims in Kunming say that they condemn the violence, it is not a reflection of the true beliefs of their faith More

Humanitarian Aid, Equipment Blocked in Cameroon

Move is seen as a developing supply crisis in West Africa More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Enviropreneur Seeks to Save the Environment, Empower the Communityi
X
September 16, 2014 2:06 PM
Lorna Rutto, a former banker, is now an ‘enviropreneur’ - turning plastic waste into furniture and fences discusses the challenges she faces in Africa with raw materials and the environment.
Video

Video Enviropreneur Seeks to Save the Environment, Empower the Community

Lorna Rutto, a former banker, is now an ‘enviropreneur’ - turning plastic waste into furniture and fences discusses the challenges she faces in Africa with raw materials and the environment.
Video

Video West Trades Accusations Over Ransoms

As world leaders try to forge a common response to the threat posed by Islamic State militants in Iraq and Syria, there is simmering tension over differing policies on paying ransoms. In the past month, the jihadist group has beheaded two Americans and one Briton. Both countries refuse to pay ransom money. As Henry Ridgwell reports for VOA from London, there is uncertainty in the approach of some other European nations.
Video

Video Scotland Independence Bid Stokes Global Interest

The people of Scotland are preparing to vote on whether to become independent and break away from the rest of Britain, in a referendum being watched carefully in many other countries. Some see it as a risky experiment; while others hope a successful vote for independence might energize their own separatist demands. Foreign immigrants to Scotland have a front row seat for the vote. VOA’s Henry Ridgwell spoke to some of them in Edinburgh.
Video

Video Washington DC Mural Artists Help Beautify City

Like many cities, Washington has a graffiti problem. Buildings and homes, especially in low-income neighborhoods, are often targets of illegal artwork. But as we hear from VOA’s Julie Taboh, officials in the nation's capital have come up with an innovative program that uses the talents of local artists to beautify the city.
Video

Video US Muslim Leaders Condemn Islamic State

Leaders of America's Muslim community are condemning the violent extremism of the Islamic State group in Iraq and Syria. The U.S. Muslim leaders say militants are exploiting their faith in a failed effort to justify violent extremism. VOA correspondent Meredith Buel reports.
Video

Video Americans' Reaction Mixed on Obama Strategy for Islamic State Militants

President Barack Obama’s televised speech on how the United States plans to “degrade and destroy” the group known as the Islamic State reached a prime-time audience of millions. And it came as Americans appear more willing to embrace a bolder, tougher approach to foreign policy. VOA producer Katherine Gypson and reporter Jeff Seldin have this report from Washington.
Video

Video Authorities Allege LA Fashion Industry-Cartel Ties

U.S. officials say they have broken up crime rings that funneled tens of millions of dollars from Mexican drug cartels through fashion businesses in Los Angeles. Mike O'Sullivan reports that authorities announced nine arrests, as 1,000 law enforcement agents fanned out through the city on Wednesday.
Video

Video Bedouin Woman Runs Successful Business in Palestinian City

A Bedouin woman is breaking social taboos by running a successful vacation resort in the Palestinian town of Jericho. Bedouins are a sub-group of Arabs known for their semi-nomadic lifestyle. Zlatica Hoke says the resort in the West Bank's Jordan Valley is a model of success for women in the region.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid

World Currencies

EUR
USD
0.7722
JPY
USD
107.08
GBP
USD
0.6171
CAD
USD
1.1041
INR
USD
61.075

Rates may not be current.