Jacob “Jack” Lew, U.S. treasury secretary
The U.S. stood firm on rejecting membership in a new China-led infrastructure bank, citing concerns it will fall short of international standards even as the rest of the world’s biggest economies sign up for the initiative.
While China made it clear it would welcome the U.S. in the Asian Infrastructure Investment Bank, the U.S. still prefers to collaborate through existing international financial institutions, a U.S. Treasury official told reporters in Beijing yesterday after Treasury Secretary Jacob J. Lew held a day of meetings there with leaders including Premier Li Keqiang.
China is seeing European nations including Germany and the U.K., along with other U.S. allies such as Australia and South Korea, seek to join the new institution in defiance of U.S. warnings that it may lack the standards of institutions such as the World Bank. Japan is likely to join the infrastructure bank within a few months after pressure from companies there, according to the nation’s ambassador to China, the Financial Times reported yesterday.
The U.S. believes it would be best for the issues over the bank’s standards to be resolved and confronted, the Treasury official told reporters on condition of anonymity. The U.S. and China had good discussions about partnerships with existing institutions to ensure that the bank would meet high standards, the official said.
The initial decisions about what kinds of projects the bank invests in will be an important signal on how it will proceed, and the U.S. can be helpful by offering advice, according to the Treasury official.
Lew was visiting Beijing to discuss bilateral economic issues and this year’s U.S.-China Strategic and Economic Dialogue, to be held in Washington. The dialogue was established in 2009 to advance relations between the world’s two biggest economies.
Lew will also give a speech on U.S.-China relations in San Francisco today.
The U.S. official also said that China’s steps toward a more market-determined exchange rate should help as it seeks inclusion in the International Monetary Fund’s Special Drawing Rights basket, a sign of reserve-currency status.
The IMF in late 2015 will conduct its next twice-a-decade review of the basket of currencies its members can count toward their official reserves. IMF chief Christine Lagarde said in Beijing last week that the yuan “clearly belongs” in the basket and the fund would work with China to that end. Bloomberg
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