WASHINGTON: US Treasury Secretary Jacob Lew yesterday said China’s yuan currency remains undervalued, a longstanding sore point that will be raised at next week’s high-level bilateral negotiations in Beijing.
Lew said that the yuan, or renminbi, has appreciated 14 percent since 2010, when China began taking small steps to allow its currency to trade more freely.
“It still needs to appreciate more. It’s undervalued,” said Lew, who will lead the US economic team at the US-China Strategic and Economic Dialogue (SED) in Beijing next Monday and Tuesday.
The value of the yuan is a highly sensitive political issue in relations between the world’s two largest economies. The United States, while not branding China a currency manipulator, which could entail sanctions, has long insisted the weak yuan gives China an unfair trade advantage.
Lew reiterated the US push for China to allow the yuan to trade at a market-determined foreign exchange rate.
“It’s fundamentally not fair in terms of trading practices,” Lew said at an event in Washington sponsored by the US-China Business Council.
Economic reforms set out in China’s third plenum reflect US concerns “at a conceptual level” but have been slow to be implemented, he said.
Lew said he was “frustrated at the pace of change” and that if China dragged its heels in reforming for five or 10 years, it was “potentially disruptive” to the global economy.
The US needs confidence that the Chinese government is not intervening in the forex market to benefit trade. “Transparency will be a very important first step,” he said.
Lew and US Secretary of State John Kerry will lead the US delegation to the sixth meeting of the SED. The two men will be joined by their Chinese co-chairs State Councilor Yang Jiechi and Vice Premier Wang Yang.