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Non-market direction of Chinese economic development poses risks: US

Press Trust of India  |  Washington 

The non-market direction of China's economic development poses growing risks to its and the long-term global growth outlook, the US has warned.

"The increasingly non-market direction of China's economic development poses growing risks to its and the long-term global growth outlook," the said in a report to the on 'Macroeconomic and Foreign Exchange Policies of Major Trading Partners' of the US.

"should advance macroeconomic reforms that support greater household consumption growth and help rebalance the away from investment," the report said.

Treasury places significant importance on adhering to its commitments to refrain from engaging in competitive devaluation and to not target China's exchange rate for competitive purposes; and on greater transparency of China's exchange rate and reserve management operations and goals, it said.

has an extremely large and persistent bilateral trade surplus with the US, by far the largest among any of the US' major trading partners, with the goods trade surplus standing at USD 375 billion over the four quarters through December 2017, an increase of USD 28 billion over 2016, the report said.

Over 2017, the Chinese currency generally moved against the dollar in a direction that should, all else equal, help reduce China's trade surplus with the US; however, on a broad, trade-weighted basis, the renminbi was broadly unchanged on net over 2017, it said.

The in its report said it remains deeply concerned by the significant trade imbalances in the global economy, and is working actively across a broad range of areas to help ensure that trade expands in a way that is fair and reciprocal.

The US' bilateral trade deficits with China, Japan, and are at very high levels, it said, adding that current account surpluses among several over the last two decades have proven both large and persistent.

The global adjustment process has not worked effectively to promote a symmetric adjustment toward smaller imbalances in a manner that sustains, rather than inhibits, global growth.

Nor are there signs that currently point toward a narrowing of external imbalances, the report said.

Achieving stronger and more balanced global growth will require that domestic demand, including consumption and investment, become the sustained engine for economic expansion in key economies that have maintained large and persistent external surpluses, Treasury said.

"This could be supported by these economies putting in place more efficient with low rates and broad bases, regulatory frameworks that support domestic investment, and sound monetary policies," it said.

The (IMFC) last fall concluded that strong fundamentals, sound policies, and a resilient international monetary system are essential to the stability of exchange rates, contributing to strong and sustainable growth and investment.

In March, all members similarly endorsed this objective, the report said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sat, April 14 2018. 21:15 IST