US Treasury Secretary Jacob Lew on Thursday said after high-level talks here that China was committed to reducing currency intervention and was preparing to make its foreign-exchange operations more transparent, a step that would make the yuan's value more market-determined.
"China is making preparations to adopt greater transparency including on foreign exchange, which will accelerate the move to a more market-based exchange rate," Mr Lew said at the end of two days of strategic and economic talks with officials.
Central bank officials have talked about making China's foreign-exchange operations more transparent in the past. If enacted, such a move would help bring greater visibility to the way China controls its foreign-exchange market -- a step toward gradually relaxing controls and giving the market a greater say in the currency's value.
Beijing left itself a major loophole on cutting interventions, saying it would make such a move only as conditions permit and offering no timeline for transparency.
"We believe that given the current economic situation and that the economic recovery has not been fully put in place and the capital flow is still not yet for normal, it is very difficult for us to completely refrain from the foreign-exchange market intervention," China's finance minister, Lou Jiwei, said Wednesday.
Still, Mr Lew said the commitments "will assist China in its reforms and will help level the playing field."
Ahead of the talks, Mr Lew said he would press China to continue to allow its currency, the yuan, to appreciate. After years of steady appreciation in the value of the yuan, some economists question whether China is done lifting the exchange rate, especially as the country's economic growth rate slows. By preventing the yuan from appreciating under market pressures, China can keep its exports internationally competitive and spur growth.
Beijing argues the currency's value is now determined by the market, an assessment the US challenges. The Treasury Department in April took Beijing to task over its exchange-rate policy. It stopped short of calling the country a "currency manipulator," a term that would potentially trigger sanctions against China, but it called the yuan's weakening in value versus the US dollar in recent months "unprecedented."
"China is making preparations to adopt greater transparency including on foreign exchange, which will accelerate the move to a more market-based exchange rate," Mr Lew said at the end of two days of strategic and economic talks with officials.
Central bank officials have talked about making China's foreign-exchange operations more transparent in the past. If enacted, such a move would help bring greater visibility to the way China controls its foreign-exchange market -- a step toward gradually relaxing controls and giving the market a greater say in the currency's value.
Beijing left itself a major loophole on cutting interventions, saying it would make such a move only as conditions permit and offering no timeline for transparency.
"We believe that given the current economic situation and that the economic recovery has not been fully put in place and the capital flow is still not yet for normal, it is very difficult for us to completely refrain from the foreign-exchange market intervention," China's finance minister, Lou Jiwei, said Wednesday.
Still, Mr Lew said the commitments "will assist China in its reforms and will help level the playing field."
Ahead of the talks, Mr Lew said he would press China to continue to allow its currency, the yuan, to appreciate. After years of steady appreciation in the value of the yuan, some economists question whether China is done lifting the exchange rate, especially as the country's economic growth rate slows. By preventing the yuan from appreciating under market pressures, China can keep its exports internationally competitive and spur growth.
Beijing argues the currency's value is now determined by the market, an assessment the US challenges. The Treasury Department in April took Beijing to task over its exchange-rate policy. It stopped short of calling the country a "currency manipulator," a term that would potentially trigger sanctions against China, but it called the yuan's weakening in value versus the US dollar in recent months "unprecedented."
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