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Make economy transparent, currency market-driven: US to China

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Washington: The White House has urged China – which is facing one of the worst financial crises in decades – to continue to pursue financial reform and move rapidly toward a more “market-determined” exchange rate system.

Stocks from London to Paris to New York all bled, as global shares went into a tailspin yesterday, with European and US stocks tumbling as concerns over Chinese economy rattled investors worldwide.

China should continue to pursue “financial reform to increase exchange rate flexibility” and to move rapidly toward a more “market-determined” exchange rate system, White House Press Secretary, Josh Earnest, told reporters yesterday.

During its meetings with Chinese officials, the US has consistently reinforced the message that the US would like to see China take additional steps to move more rapidly toward a market-determined exchange rate system.

“That is a message that (the Treasury) Secretary (Jacob) Lew has been reinforcing not just over the last couple of years that he’s been in that job, but even over the last couple of weeks, as we’ve seen some increased volatility in the Chinese financial markets,” he said in response to a question.

Earnest said one of the cases that the US has made to the Chinese government is that a more “transparent economy” is one that will benefit not just the Chinese economy but the global economy.

“We certainly hear from business leaders in the United States that are interested in doing business in China that a more transparent business environment would make them more likely to do business there.

We obviously welcome and want to advocate for US businesses that are looking to go overseas because ultimately that creates a good economy opportunity here in the United States,” he said.

“Ultimately, these are the kinds of decisions that Chinese officials have to make. The message they hear consistently from the Obama administration is one that a lot of which is focussed on the need for China to continue to pursue financial reform, and to move rapidly toward a more market-determined exchange rate system.

“But certainly improving transparency into their economy is something that we believe would be good for the global economy and also good for the economy in China as well,” he said in response to a question.

PTI