US Trea­sury chief says high level en­gage­ment ‘wel­comed’

China Daily (Canada) - - FRONT PAGE - By AMY HE in New York amyhe@chi­nadai­lyusa.com

US Sec­re­tary of Trea­sury Jack Lew said that he be­lieves high-level US en­gage­ment on China’s eco­nomic pol­icy and re­form is wel­comed.

Tran­si­tion in an econ­omy such as China’s, where lead­ers are start­ing to im­ple­ment eco­nomic re­forms posted in out­come of the Third Plenum, is dif­fi­cult, Lew said on Thurs­day in a dis­cus­sion with Wall Street Jour­nal As­sis­tant Man­ag­ing Ed­i­tor John Bussey at the Coun­cil of For­eign Af­fairs.

“I can’t tell you that at the end of this year we’ll be able to say they made the move we hoped they would make. I can tell you that we’re go­ing to en­gage with them at high lev­els on a con­sis­tent ba­sis to keep press­ing for­ward, mak­ing the case, and I be­lieve that’s wel­comed,” he added.

Lew said what con­cerns him is when re­forms will start tak­ing place. “When I meet with my Chi­nese coun­ter­parts, I am pretty con­fi­dent that they are in­tent on the path of eco­nomic re­form that they de­scribe,” he said. “At the same time, I am not con­fi­dent about the time­frame or which tar­gets of op­por­tu­nity will be sequenced early in the queue.”

Top lead­ers in the Chi­nese gov­ern­ment stressed mar­ket re­form in dis­cus­sions at the Third Plenum at the end of last year, and Lew said he thinks the Chi­nese “are go­ing to move in that di­rec­tion.”

At the same time, Lew said that if there are ar­ti­fi­cial bar­ri­ers in place, mar­ket forces won’t work. Dur­ing last sum­mer’s strate­gic and eco­nomic di­a­logues, the two coun­tries agreed on im­por­tant poli­cies, and Lew said that he was “very pleased” that China opened the Shang­hai Free Trade Zone. “They’ve moved on al­ter­ing a decade’s long pol­icy of pre­sum­ing in­dus­tries were closed to for­eign ac­tiv­ity to pre­sum­ing that they’re open, un­less in­di­vid­u­ally closed,” he said.

In spite of that, there are still re­stric­tions be­ing im­posed in the zone, in­clud­ing des­ig­na­tions of “what’s open and what’s close,” he said re­fer­ring to the free trade zone’s neg­a­tive list, which has bans cer­tain in­vest­ments.

If the zone can open up to “real com­pe­ti­tion” — com­pe­ti­tion from US fi­nan­cial firms, for ex­am­ple — then that will be “a mean­ing­ful sig­nal,” he said.

At a 2014 eco­nomic fore­cast at the be­gin­ning of the year, Pek­ing Univer­sity econ­o­mist Yao Yang cau­tioned that re­form plans will face chal­lenges, not­ing that the neg­a­tive list in the Free Trade Zone has dis­ap­pointed in­vestors since al­most all kinds of bans are spec­i­fied.

As for China’s State-owned en­ter­prises ( SOEs), Lew stressed again that “it’s crit­i­cal to the Chi­nese econ­omy to let mar­ket forces drive much more — if not all — ma­jor eco­nomic pol­icy.” SOEs see built-up in­ven­tory and empty build­ings and that’s “not a way to main­tain growth” in the com­ing years, he said.

When the Trea­sury sec­re­tary vis­ited China, Lew’s Chi­nese coun­ter­parts didn’t tell US lead­ers to “stay out of their busi­ness,” he said, but wanted to learn from the US’ eco­nomic ex­pe­ri­ence.

“I think our con­tin­u­ing to bring fo­cus to th­ese is­sues is some­thing that helps them to make progress. But I ap­proach it in a very clear-headed way. In­ten­tions are crit­i­cal and they’re im­por­tant, but it’s re­sults in the end that mat­ter,” Lew said.

SUN CHENBEI / CHINA DAILY

US Sec­re­tary of Trea­sury Ja­cob Lew (left) talks about the US and world econ­omy at the Coun­cil on For­eign Re­la­tions in Wash­ing­ton on Thurs­day morn­ing. John Bussey (right), as­sis­tant man­ag­ing ed­i­tor and ex­ec­u­tive busi­ness ed­i­tor of Wall Street Jour­nal, mod­er­ated the event.

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