Treasury chief pledges to hold China ‘accountable’

Treasury Secretary Jack Lew says the United States will hold China accountable for exchange rate fluctuations that recently roiled global financial markets.

Lew said that the Obama administration has been quite clear with Chinese government officials that the value of Beijing’s currency, the yuan, remains a chief U.S. concern.

In an wide-ranging interview with CNBC that aired Thursday, Lew said China has “to understand, and I make this point to them quite clearly, that there’s an economic and a political reality to things like exchange rates.”

{mosads}“They need to understand that they signal their intentions by the actions they take and the way they announce them,” he said.

“And they have to be very clear that they’re continuing to move in a positive direction. And we’re going to hold them accountable.”

China’s surprise move in early August to let its currency float based on market forces caused a sharp drop in its value, leading to a backlash of concern from U.S. lawmakers.

“I think it is something we will discuss at the G-20, is any temptation to slip into what might look like competitive devaluation. It’s both unfair and it ultimately leads to a worse global economy,” Lew said.

Lew said comments from 2016 presidential candidates like Donald Trump that China’s economic policies are “one of the greatest thefts in history” don’t steer him away from the importance of the relationship between the world’s two largest economies.

“I don’t need to look to the political statements to focus on the importance of the U.S.-China economic relationship,” Lew said.

China’s President Xi Jinping will visit Washington later this month amid the fresh concerns about Beijing’s recent policy moves.

“We expect them to behave in a way that meets a level of transparency where it’s credible that they’re moving to keep commitments that they’ve made,” Lew said.

To that end, Lew said China needs to put reforms “in place where the economy becomes much more market oriented, where consumer demand grows and there’s a shift from a heavy, heavy emphasis on investor spending to more consumer-driven spending.”

“What they’re experiencing now is the challenge of managing that transition in an orderly way,” he said.

“I think the really important question for the medium and the long term is, ‘Do they have the ability to stick to the reform plan that they’ve mapped out?”

But Lew still said he didn’t have major concerns about the recent stock market volatility.

“I keep my eye on the market,” he said. “But I try to not respond immediately and form judgments based on minute-to-minute or day-to-day market moves.”

With questions about China’s and the broader global economy looming ahead of the G-20, Lew called U.S. growth a bright spot with “continuing signs of strength.”

“We’ve [recently] had a consistent and quite stable series of indicators that the U.S. economy remains strong,” he said. “We’re seeing good, sustained job growth. And we’re seeing increasingly strong consumer demand.”