Spero News

US unconfident about Chinese reforms
Treasury Secretary Jack Lew unsure about the sequence or pacing of reforms.
Sunday, November 24, 2013
by Spero News

US Treasury Secretary Jack Lew, gave contradictory remarks about Chinese economic reforms. In an interview, Lew said he believed China is serious about economic reforms, but he doubts the sequence or pace of the reforms.

Lew met with Chinese Premier, Xi Jinping, after the Third Plenary Session of the 18th Central Committee of the Communist Party of China.

At question is the negative impact of state-owned enterprises on the Chinese economy and opening the market to foreign investment. "I don't want to suggest in a month it will be transformed," Lew said, "but they've chartered a direction we've encouraged them to talk about. We'll talk to them about moving faster."

China has a surplus of inventory building at state-owned enterprises, which Lew said Chinese leaders realize is a signal about an economy that is not working. "They've got to get more market signals into the economy to achieve the growth they need," Lew said.

China's Communist Party acknowledged in a statement after the plenary session that the market should play a decisive role in allocating resources.

Chinese Fortune Global 500 brands are likely to be reorganized first, according to the Chinese government. The companies on the block of reform includes oil giants Sinopec, CNPC and CNOOC, telecom operators China Telecom and China Unicom, and the State Grid.

The economic growth rate in China is officially between seven and eight percent, but many investors speculate the real growth rate to be lower.

Lew singled-out the state-owned Chinese financial industry  as where he'd like to see reform. "Take the Shanghai Free Trade Zone," Lew said, "they have not determined the details. If it opens up their financial services, that's a big deal."

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