Lew Criticizes China for Delaying Plans to Open Economy

   Ian Talley 

        U.S. Treasury Secretary Jacob Lew Tuesday warned against China's delaying plans to open its economy to international markets amid a slowdown in the country's growth prospects.
        Fresh from meetings with top Chinese officials in Beijing, Mr. Lew cited China's managed exchange rate, barriers to foreign technology and cross-border investment controls as undermining global growth and threatening China's relationship with the U.S.
        He delivered his assessment in a speech to the Asia Society Northern California.
        The secretary took a more conciliatory approach to China's new Asian Infrastructure Investment Bank, an institution that challenges the U.S.-led established international order, saying the U.S. welcomed the bank.
        "I was encouraged by my conversations in Beijing in which China's leaders made clear that they aspire to meet high standards and welcome partnership," Mr. Lew said.
        Washington suffered a diplomatic bruising in recent weeks as previously-staunch U.S. allies snubbed U.S. appeals not to support the new infrastructure bank and instead said they would be founding members.
        Mr. Lew's criticisms of Beijing's economic overhauls underscore concerns in Washington that China isn't moving fast enough to open its markets. The administration is also worried that, as Beijing asserts its new found economic and political power, its engagement might not prove constructive for the U.S. and the global economy.
        "With China's economic growth and emerging focus on driving international development, there is considerable interest in how China will integrate into the framework for international economic relations sustained since World War II, how it will use its new influence and what ideas and ideals it will promote," Mr. Lew said.
        Washington's China anxieties extend beyond the economic: Top U.S. military brass are wary about the country's expanding navy, unsure of whether to count Beijing as a partner or a potential adversary.
        In the economic sphere, Mr. Lew said that while Beijing had allowed its currency to appreciate in recent years to levels more in line with economic fundamentals, authorities had failed to allow the market to determine the value, a policy that has hurt the global economy.
        "We have enjoyed tremendous benefits from the global economy, but our workers and firms suffer when there are unfair anticompetitive practices at play," Mr. Lew said.
        The secretary said he cautioned Chinese officials against policies that block foreign technology, saying such efforts "would damage our bilateral economic relationship," and reiterated U.S. concerns about intellectual-property-right protections and cybercrime.
        As Mr. Lew met with officials Monday, a popular U.S. coding website was under attack in a cyber-strike that security experts say is likely an attempt by China to shut down anticensorship tools.
        The U.S.'s top economic official said Beijing's efforts to internationalize its currency--code to getting the yuan recognized as a global reserve currency--could only come as Beijing completely liberalizes its financial sector.
        "China will need to successfully complete difficult fundamental reforms, such as capital-account liberalization, a more market-determined exchange rate, interest-rate liberalization, as well as strengthening of financial regulation and supervision," Mr. Lew said.
        Those remarks likely signal the U.S. may not back Beijing's request for the International Monetary Fund to include the yuan this year in its elite basket of reserve currencies that includes the dollar, the yen and the euro. China wants the yuan officially recognized as a reserve currency as a symbol of its growing global economic clout and a potential future tool for political leverage around the world.
        (END) Dow Jones Newswires

        March 31, 2015 17:07 ET (21:07 GMT)

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