China has demonstrated
commitment to moving toward a market-driven exchange rate, said a senior U.S.
Treasury official, speaking on the sidelines of a meeting of G20 finance
ministers and central bankers in Chengdu on Saturday.
However, a key test will be
whether the yuan is allowed to appreciate in value in response to market
pressures, the official told journalists, adding that the renminbi has been
moving in response to market factors.
"They have been
exercising policy in a way that has been more clear than it was even a year
ago. That's an important step," he said, noting that China in recent
months had intervened in currency markets to keep the yuan from falling.
He also said he saw a path
for China to manage a soft landing for its economy.
"I don't think it was
ever realistic to think that China would grow at double-digit rates forever.
The question is whether it settles into a sustainable growth rate for the long
term. And that's where the reforms or so essential."
The official said that China
needed to tackle "corrosive" industrial overcapacity, reform
state-owned enterprises, allow competition into its markets along with other
steps to accelerate its transition to a more consumer-driven economy.
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