CHENGDU, China (Reuters) - 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.
Reporting by David Lawder; Writing by Pete Sweeney; Editing by Jacqueline Wong