CANNES, France — Obama administration officials said Thursday that China has been open to discussions of currency policy to aid global growth by rebalancing demands for its exports and creating more domestic demand for imported goods.
Many U.S. lawmakers and presidential candidates have expressed concern about what they view as China’s efforts to manipulate the value of its renminbi, keeping it artificially low in relation to the dollar to make Chinese goods cheaper on world markets.
Chinese officials have fought back, noting their currency has actually been rising in value and saying the United States is unfairly blaming China for an economic mess of its own making.
Lael Brainard, the U.S. Treasury undersecretary for international affairs, said that world leaders raised the issue during working sessions at the Group of 20 summit Thursday and Chinese officials responded positively. She anticipated that China would agree to include formal notation related to “recognizing the role of greater exchange rate flexibility” in the “action plan” that emerges from the summit.
“I think China is recognizing the role of greater exchange rate flexibility in helping to shift to domestic demand,” Brainard told reporters Thursday evening. “It is one of the most powerful instruments that China has at its disposal in the near term to both counter inflationary pressure, which is a very high priority for them, and also to shift to domestic demand-led growth. It’s very much been part of the discussions here.”
U.S. officials described China’s willingness to reconsider its currency as part of a global effort to promote growth as a way to help spur growth, at a time when the G-20 meetings have been dominated by Europe’s growing debt crisis.
As one of the world’s fastest growing economies, China is in position to exert significant influence at a time when other major powers, including the United States, remain strapped for cash.
U.S. Treasury Secretary Timothy Geithner met with Chinese Vice Premier Wang Qishan on Thursday, Brainard said, and the pair discussed ways to aid Europe’s recovery.
“One of the most important contributions China can make is to shift its own growth path to one of increased domestic demand,” Brainard said.