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 Washington has been pressing China for years to allow its currency
to trade at stronger values. A weak yuan makes Chinese exports
cheaper for U.S. consumers at the expense of U.S. producers. A
weaker yuan also makes Chinese consumers less able to buy foreign
goods.
Last month, U.S. Treasury Secretary Jack Lew welcomed a decision by
China to allow its currency to vary more against the dollar in daily
trading.
Monday's comments by a senior official from the Treasury Department
suggested the United States was not completely sold on China's
intention to reduce authorities' interventions in exchange markets.
"If the recent currency weakness signals a change in China's policy
away from allowing adjustment and moving toward a market-determined
exchange rate, that would raise serious concerns," the official, who
asked not to be named, told journalists in a phone call.
In comments that outlined U.S. positions before meetings later this
week of the International Monetary Fund and between Group of 20
nations, the official noted the widening of China's currency trading
band came just after a drop in the yuan's value that coincided with
reports of "considerable intervention" in exchange markets by
Chinese authorities. That is exactly the sort of behavior Washington
wants Beijing to ditch.
The United States also appears likely to pressure Europe at the
meetings to act more decisively to fix its troubled banking sector.
The Treasury official said recent economic data from Europe showed
the region was experiencing "chronic low inflation and weak demand."
That appeared to be a nod to growing concerns that Europe's economy
is so weak it risks falling into a dangerous spiral of falling
prices and wages known as deflation.
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"More needs to be done to support growth," the Treasury official
said.
The official had blunt words for other economic powers as well,
saying that Japan should avoid engaging in too much fiscal
austerity.
He said U.S. sanctions on Russian officials were already having an
impact on Russia's economy. The official also chided emerging
markets for going too slowly in adopting free-floating currencies.
"Resistance in many emerging markets to moving more quickly to
market-determined exchange rate regimes is hindering the rebalancing
needed to ensure a lasting, strong global recovery," the official
said.
(Reporting by Jason Lange; editing by Andrea Ricci and Peter Cooney)
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