What’s unclear is when that might happen.
Lew, who met with officials including Premier Li Keqiang, Vice Premier Wang Yang and People’s Bank of China Governor Zhou Xiaochuan, didn’t hear any indications that China was backing away from making the economy more market-oriented, according to a Treasury official who briefed reporters in Beijing. The U.S. is pushing on an open door, said the official, who declined to be identified per department policy.
Lew was traveling more than 40 hours round-trip to spend about eight hours in talks with the goal of speeding up progress ahead of the annual Strategic & Economic Dialogue to be held in Beijing in July. Much of the discussions were built around Lew’s relationship with Wang, and the two spent more than four hours together.
The Chinese said they are serious about the principle of having market forces determine exchange rates and interest rates, though there was no commitment on a timetable, the Treasury official said. Of particular concern to Lew are indications that the Chinese have intervened heavily in the currency market to weaken the yuan. The U.S. is pushing China to let the currency strengthen and to be more transparent about the intervention.
Chinese authorities have let the yuan lose almost 3 percent of its value this year after it gained 3 percent in 2013. The currency fell to an intraday low of 6.2676 per dollar on April 30, the weakest since October 2012.
That wasn’t done with the intention “of shifting course and adopting a weak-currency policy,” said David Loevinger, a former Treasury Department senior coordinator for China affairs and now an analyst at TCW Group Inc. in Los Angeles.
“This was mainly done to burn the fingers of investors that have taken out large, leveraged long positions,” he said. “ They want investors to think twice before putting on long speculative positions.”