U.S. Treasury Secretary Asks China to Reaffirm Commitment to Change

Treasury Secretary Jacob Lew pressed China to reaffirm its commitment to move toward a market-oriented, consumer-driven economy on the eve of Chinese President Xi Jinping's visit to Washington.

Mr. Lew gave mixed reviews to the way Beijing had responded to economic volatility in the last several months in an opinion column published online by The Wall Street Journal on Monday evening.

"Restrictions on the purchase of foreign-technology products, and excessively broad reviews for foreign investments, have underscored long-standing questions about China's business climate," Mr. Lew said. He characterized last month's currency-exchange-rate revamp as an "abrupt" move that roiled global markets.

Those policies, along with the extraordinary measures the government undertook this summer to stabilize the country's stock market, have reinforced doubts over whether China will remain committed to letting market forces play the primary role in steering its economy, he said.

Delaying any market overhaul would exacerbate the nation's long-term challenges and could sow new concerns about its growth prospects, Mr. Lew said. Already, a slowdown in China's economy, given its size, has raised concerns about potential spillover to emerging markets.

Mr. Xi makes his trip, with stops in Seattle and New York and talks with President Barack Obama in Washington, D.C., at a time when political, economic and military relations face new strains. China's efforts to build artificial islands in the South China Sea and allegations of cyberattacks on U.S. entities have antagonized business leaders and politicians.

Last month, China engineered a modest devaluation of its currency, the yuan, in a move that policy makers said would make the yuan's exchange rate more market-driven. The decision unsettled global markets and prompted worries that China would step away from market-friendly changes and possibly unleash a new currency war.

U.S. officials have pressed the Chinese to be more careful in communicating such policy moves, a senior Treasury official said. Chinese leaders at this month's gathering of the Group of 20 largest economies in Turkey said that August's currency moves had been misinterpreted by global markets, according to the Treasury official.

In Monday's column, Mr. Lew said it was incumbent upon China to allow the yuan to strengthen and not just weaken when dictated by market forces.

Mr. Lew also called on China to provide "fair market access" to foreign companies and to honor intellectual property rights. Over the past year, the Justice Department has increased its focus on economic espionage from China amid concerns from U.S. multinationals about the theft of corporate secrets.

Finally, Mr. Lew said China's economic overhaul should include targeted fiscal stimulus designed to boost domestic consumption. With the right policies, China's economic future "can be very strong," Mr. Lew said.

Write to Nick Timiraos at [e-mail]

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September 21, 2015 21:35 ET (01:35 GMT)

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