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Daniel Ren

China and the United States are expected to give each other a heads-up on financial policy with the opening of a new communication channel between the two countries.
President Xi Jinping said after a summit with US leader Barack Obama on Friday that Vice-Premier Wang Yang and US Secretary of the Treasury Jack Lew will hold regular telephone conversations to exchange views on economic issues.
Xi said the goal was to improve Sino-US coordination on policy and to maintain global financial stability.
Renmin University professor Jin Canrong , a Chinese government adviser, said: "It is a concrete move taken by the two nations to better communicate on economic policies.
"Talks on the phone about topical issues help officials gain first-hand information about each other's policy directions."
The decision to hold regular high-level conversations comes after a stock market rout in the A-share market and the Chinese central bank's sudden one-off devaluation of the yuan, which were widely thought to have exported instability to the global financial markets.
The US Federal Reserve delayed an expected hike in its benchmark interest rate last week, hinting that its decision was in part due to the turbulence China stirred in the world economy and financial markets.
The two economies have different policy directions - the US is inclined towards monetary tightening while China is opting for a further loosening to bolster slowing economic growth.
If the US were to increase interest rates amid China's monetary easing, a "currency war" among other economies would break out as they rush to devalue the currencies to make their products attractive abroad.

With no synergy in economic policymaking between the world's two biggest economies, panic on the financial front has been quick to surface.
The two powerhouses already meet annually for their strategic and economic dialogue, but economists said this was inadequate to effectively coordinate policy.
Also on Friday, Xi stressed again that the yuan's exchange rate was "moving towards stability" following a certain degree of fluctuation.
Analysts had expected Xi to seek further support from the US for China's efforts for the International Monetary Fund to include the yuan in its basket of reserve currencies.
A joint statement said the US supported the move "provided the currency meets the IMF's existing criteria".
It is estimated more than US$1 trillion of global reserves would be converted to yuan assets if the Chinese currency was included in the IMF's Special Drawing Rights.
Meanwhile, the two countries agreed to step up work towards signing a high-standard bilateral investment treaty (BIT), with Obama describing it as a way to level the playing field for American companies in China.
Ahead of Xi's visit to the US, a letter signed by 94 chief executives, including Apple's Tim Cook and Facebook's Mark Zuckerberg, was submitted to Obama as they expressed hope for "significant progress" in BIT negotiations during the summit.
"For China, a further opening up has long been a bargaining tool in dealing with the Sino-US relationship," said Xu Mingqi , a researcher with the Shanghai Academy of Social Sciences.
"Greater market access is desirable for American companies, and China hopes the United States will understand the importance of their economic interests here."


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(From left) China's State Councilor Yang Jiechi, China's Vice Premier Wang Yang, Secretary of Treasury Jack Lew and Secretary of State John Kerry shake hands following the conclusion of the US China Closing Statements at US China Strategic and Economic Dialogue at the US State Department in Washington. Photo: AP

Xi Jinping vows not to further devalue yuan as currency approaches stability: Obama

Photo: Xinhua

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