China said it can’t stop intervention in the yuan because economic growth is too weak and capital flows aren’t steady enough to warrant changes.
“The U.S. side has repeatedly asked, in terms of exchange-rate policy, whether China needs to intervene any more,” Finance Minister Lou Jiwei said at a press briefing yesterday in Beijing during economic talks between the countries. “But for us, under the current situation, when the economy hasn’t recovered fully and when cross-border capital flows are not completely normal, we’ll continue” existing practices, he said.
The comments signal China may move more slowly than the U.S. wants on liberalizing currency policy after it widened daily trading limits in March and the central bank said it would eventually end normal intervention in the market. Lou spoke hours after Treasury Secretary Jacob J. Lew said moving to a market-determined exchange rate will be a “crucial step” in helping drive China’s economic growth.