WASHINGTON:
Economic relationship between the world's two largest economies - US and
China -- is likely the world's most important financial association according
to the US Treasury Secretary Jacob Lew.
However, he said, that there were several challenges
ahead for China as it transitions from a manufacturing economy to a consumer
driven one and consequently its ties with the US.
"US-China relationship is probably the most
important economic relationship in the world since it involves the world's two
largest economies," he said, while adding that to what extent China is
able to push economic reforms remains to be seen.
"I think the desire to be included in the Special
Drawing Rights -- SDR - basket at the International Monetary Fund was a helpful
incentive for China to make reforms in how it manages its currency. However it
doesn't reflect completion of a reform agenda," Mr Lew said suggesting
that China needs to do more.
"It is an important step along the way, recognition
that China has made important policy changes, and that they meet the standards
of the IMF," he added.
The US has long maintained that China needs to allow
market forces to play a more dominant role so that it can tackle the problem of
excess capacity - stocks of products that are not required in any market.
"China has changed the way it manages its exchange
rate, so that's less of a hot issue today. But the real test is going to be
when there is pressure on the Chinese renminbi to appreciate - does China let
it appreciate? The jury will be out until we see macro-economic circumstances
that test that," he said.
On the issue of excess capacity building up in China's
key manufacturing sectors the, the US Treasury Secretary said it was not a
healthy sign.
"Fundamentally, it's just not good for China. I
believe there is still room for China to manage what is the hardest transition
- from a heavily industrial to a much more consumer driven economy," he
said, cautioning that China "has space, but it is not infinite
space".
0 comments:
Post a Comment