Bretton Woods is still relevant, US tells China

While most of the attention these last few days has been drawn to Lausanne where the signature of a milestone accord between Iran and the great powers remained uncertain, the meeting in Beijing of US Treasury Secretary Jack Lew with top Chinese officials, including Premier Li Keqiang, has witnessed interesting developments. Lew’s visit has been part of the diplomatic preparations towards the first state visit by President Xi Jinping of China to the United States that will take place in September 2015. Lew’s meetings have also laid the groundwork for the next round of China-US economic dialogue and given indications on what the two leaders’ talks will focus. The top priority, second to none even military affairs, remains the strengthening and the deepening of the bilateral economic relations.

Welcoming the reforms that the Xi administration is undertaking, “it is critical that China continues to move to a more market-determined exchange rate and a more transparent exchange rate policy,” Lew underlined. The USA also supports China’s efforts to shift towards greater reliance on domestic demand, Lew added, and looks forward to working with China as it becomes more integrated into the global financial system. Following recent developments regarding the AIIB, Lew has defended the “strong interest” of both countries “in preserving and advancing (…) institutions” whose global architecture began at Bretton Woods with the World Bank, the IMF and continued later with the WTO and the ADB.

On the Chinese side, nobody questions the importance of a sound and fruitful economic relationship with the USA, but the Chinese government seems less enthusiastic if not indifferent when it comes to “continue embracing the international financial system” as it exists today. “It is only natural the rapid growth of China-US economic relations will encounter differences and disputes,” a Chinese foreign ministry spokesperson admitted, adding that the AIIB “is a useful supplement to the existing multilateral development banks and a move that will benefit all Asian countries and the whole world.” According to Premier Li who gave an interview with the Financial Times, initiatives like the AIIB shows that “China has been an active participant of the international economic and financial system”; a diplomatic way to tell Lew his remarks on China’s “integration” were useless.