US tells China at G20 to avoid 'competitive devaluation'

A meeting as part of the G20 finance ministers meeting in Turkey, on Sept 4, 2015 in Ankara.
A meeting as part of the G20 finance ministers meeting in Turkey, on Sept 4, 2015 in Ankara. PHOTO: AFP

ANKARA (AFP) - US Treasury Secretary Jacob Lew on Friday told his Chinese counterpart at a G20 meeting in Ankara to avoid competitive devaluation and improve communication of Beijing's economic policy.

"China should allow its exchange rate to reflect underlying fundamentals, avoid persistent exchange rate misalignments, and refrain from competitive devaluation," a US Treasury spokesman quoted Lew as telling Chinese Finance Minister Lou Jiwei in a meeting on the sidelines of the G20.

It added Lew also "underscored the importance of China carefully communicating its policy intentions and actions to financial markets".

The Chinese central bank on August 11 devalued the yuan by nearly two per cent, surprising markets and raising concerns about the effects of China's economic slowdown.

Mr Lew emphasised the importance of China honouring its commitments to move in an orderly way "towards a more market-determined exchange rate system".

Mr Lew also noted that it was important for China to signal that it will allow market pressures to drive the yuan "up as well as down".

Mr Lew also urged stronger economic reforms from China.

"He emphasised that continued progress on economic reform would result in a stronger, more stable, and more balanced Chinese and global economy, which is in China and America's interests," the spokesman said.

Mr Lew said that the upcoming visit by Chinese President Xi Jinping to Washington later this month "is an opportunity to make progress on issues vital to our economic relationship".