China shouldn't delay on economic reform, US Treasury chief Jack Lew says

PUBLISHED : Sunday, 11 May, 2014, 5:26am
UPDATED : Sunday, 11 May, 2014, 5:26am

United States Treasury Secretary Jack Lew said he would call on Chinese leaders this week to let markets determine the value of the yuan and to avoid postponing measures to overhaul their economy, even as growth falters.

"They obviously have to worry about their short-term economic situation," Lew said in an interview airing this weekend. "What they can't do is treat the long-term reforms as something they can just put off. They need to be serious about it."

Lew, who will meet Chinese officials on Tuesday in Beijing, said that while China had made some progress in loosening restrictions on its currency, "we've seen some very negative movement in the exchange rate in recent months".

Lew said he had been telling his counterparts to avoid becoming an alternative source of funding to Russia as US sanctions there begin to bite.

"We've been making the case consistently, wherever we go, that it's unacceptable for Russia to violate Ukraine's sovereignty," he said. "And that when we take actions and other countries in the world take action, it is important for there not to be backfill."

Russian President Vladimir Putin plans to open the door to Chinese money as US and European sanctions over Ukraine threaten to tip the economy into recession, two senior government officials said.

The move would roll back informal limits on Chinese investment as Russia seeks to stimulate growth, said the officials, who have direct knowledge of talks and asked not to be identified because the information wasn't public.

On the strategy for imposing sanctions against Russia, Lew said the administration had "made very clear that our goal is not to go to the maximum degree that one can to hurt the Russian economy. It's to get President Putin to change Russia's policy."

"We have been moving step by step and in a very surgical way," he said.

"The goal here is not to hurt the European economy, the American economy. It's not to hurt the Russian people."

While US officials have discussed targeting entire sectors of the Russian economy, they have so far only applied sanctions against 45 individuals, including gas giant Rosneft's chief executive officer, Igor Sechin, and 19 entities, including SMP Bank and Bank Rossiya.