US says it will hold China ‘accountable’ for its exchange rate policies

US Treasury Secretary Jacob Lew says the United States will hold China responsible for the political and economic impact of its currency policies after last month’s yuan devaluation.

“They have to understand, and I make this point to them quite clearly, that there’s an economic and a political reality to things like exchange rates,” Lew said in a CNBC television interview that aired on Thursday.

“They need to understand that they signal their intentions by the actions they take and the way they announce them,” he said, referring to Beijing’s sudden devaluation of the yuan on August 11 that triggered shock waves in global markets.

The Chinese authorities “have to be very clear that they’re continuing to move in a positive direction. And we’re going to hold them accountable”, Lew said.

Lew said that China’s exchange rate policy and its economic reforms would figure in the discussions at the Group of 20 meeting of finance chiefs that opens on Friday in Turkey.

“How they manage their exchange rate is a matter of great concern to us and that they need to be willing to let market forces drive the value up, not just drive it down,” he said in the interview conducted Wednesday.

Since the yuan was allowed to sink about 2.8 per cent against the dollar over three days last month, the rate has held almost unchanged, with the Chinese currency strengthening slightly since Monday.