US Treasury secretary leaves talks with China pledge to reduce currency intervention
Commitment to limit control is significant, but challenges remain in carrying it out, US says
US Treasury Secretary Jack Lew praised the annual dialogue with his Chinese counterparts as "good and productive", after Beijing agreed to reduce intervention in the currency market as conditions permit.
Lew added that how that promise would be met remained to be seen.
China's commitment on reducing control and offering greater transparency on foreign exchange "will help accelerate the move towards a more market-determined exchange rate and is essential for creating a level playing field", Lew said at a briefing yesterday after the conclusion of the two-day US-China strategic and economic dialogue in Beijing.
Putting those commitments into statement was "a major change", Lew said. "I think that we still have a process ahead, because the experiences in the next few months will tell us a lot about what the real impact is."
Asked by a reporter whether the US desired a weaker dollar, Lew said: "Market conditions will determine whether rates will go up or down. But [that] they are increasingly driven by the market with less and less intervention is a good thing."
China recorded another month of significant trade surplus with the United States, of US$31.6 billion, in June. Washington has criticised China for undervaluing the yuan to boost exporters' competitiveness, after the yuan depreciated by more than 2 per cent in the first half.
Beijing also committed to further opening up the services sector to foreign investment, including the financial, and speed up the revision of its guidelines for foreign investment, Lew said.
Both sides agreed to intensify negotiations towards a bilateral investment treaty, possibly to complete discussion of the language this year, he said. But such a process would always be "a difficult and complicated one".
Deputy Finance Minister Zhu Guangyao echoed the concern, saying: "We will expect many difficulties as China and US are two different countries." There would be plenty of challenges as China was undergoing comprehensive reform.
In a bid to stabilise the global oil market, Lew said, China and the US also signed a memorandum of understanding on "increasing cooperation and exchanges on transparency, data quality and policies of China's strategic petroleum reserves".
China pledged to "vigorously" prosecute cases of trade secrets theft as part of its efforts to improve intellectual property rights protection, he said.
Separately, Vice-Premier Wang Yang said the two sides had discussed expanding the World Trade Organisation's Information Technology Agreement.
Additional reporting by Kwong Man-ki and Teddy Ng