By Dow Jones Business News,
February 21, 2014, 12:14:00 AM EDT
By Ian Talley
SYDNEY--China should accelerate plans to liberalize its economy even at the risk of fomenting social and political
unrest, U.S. Treasury Secretary Jacob Lew said.
As recently as late last year, Mr. Lew applauded Beijing's willingness to open its markets to more foreign
investment, reform its financial sector, and move toward more market-determined pricing in the economy. At the time,
however, he questioned the new leadership's commitment to delivering the reforms in time to be of real use to the
fragile global economy.
Several months later, Mr. Lew has expressed disappointment about the pace of action in Beijing.
"I have yet to see the signs that they're moving at the speed we would want on many of the issues," Mr. Lew said at
a Institute of International Finance conference ahead of a meeting of Group of 20 finance officials this weekend.
Mr. Lew said Beijing understood the need to boost domestic demand and restructure the Chinese economy. But "they're
concerned about social and political stability during a time of economic transitions," he said.
"We understand economic transitions are hard," Mr. Lew added. "But we also know that putting off economic
transitions will only make it harder."
Meanwhile, the secretary said Washington would press Beijing to move faster and with more clarity and more
Mr. Lew was more sanguine about an issue that is worrying markets now--the amount of bad loans in China's opaque
banking system. Many economists and investors fear that slowing growth and tightening credit conditions could reveal a
mountain of failing loans that could potentially lead to much slower economic growth.
China's economy has been a major driver of global growth since the global financial crisis and slowing growth could
exacerbate economic problems in emerging and developed economies.
Those anxieties were fueled with another sign of weaker growth in the country Thursday.
Despite the lack of clear data on the scale of China's banking problems, some economists say worries are overblown
since the country has more than $3 trillion in cash reserves.
"It's something China has the capacity to manage and at the moment its' not something that I look at as a globally
systemic issue," Mr. Lew said.
Write to Ian Talley at email@example.com
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