U.S. Treasury Secretary Jacob J. Lew, speaking before a key U.S.-China economic meeting next week, said China’s yuan (CME:QTN14) remains undervalued, hurting Chinese consumers and impairing global trade.
“It still needs to appreciate more, it’s undervalued and that is something that hurts Chinese consumers, it reduces their purchasing power,” Lew said today in Washington. “It’s fundamentally not fair in terms of trading practices, which is why we press on it so hard.”
Lew, who will be in Beijing on July 9-10 for talks with Chinese leaders as part of the annual U.S.-China Strategic and Economic Dialogue, wants to push his Chinese counterparts to do more to allow market forces to determine the exchange rate.
China already widened the yuan trading band and raised the target rate, steps that Lew praised while calling on China for more transparency when it intervenes in foreign-exchange markets.
The yuan climbed for a fourth day in the longest run of gains since January as reports showed factory output picked up in June. The currency touched a 12-week high as the official Purchasing Managers’ Index for manufacturing released today showed a reading of 51 for last month, the highest since December.
“We seem to take two steps forward and at least part of a step back,” Lew said. “We need to keep making progress getting toward a market-determined exchange rate.”
On his last visit to Beijing in May, Lew said market access and the exchange rate were the top U.S. priorities in China.
Lew spoke today on a panel hosted by the U.S.-China Business Council.