US calls for financial sector modernization
Updated: 2005-10-18 11:03
After China affirmed commitment to enhance currency flexibility and gradually
move towards a fully market regulated yuan regime, U.S. Treasury Secretary John
Snow shifted his demands for immediate yuan revaluation to a broader call for
Chinese financial modernization.
U.S. Treasury Secretary
John Snow, left, shakes hands with Chinese Premier Wen Jiabao during their
meeting in Beijing Monday, Oct. 17, 2005. [AP]
Snow’s loud call for China to reform its system of banking and investment is
beneath an obvious belief to seek more opportunities for American businesses.
Snow’s new stance, according to a report of The New York Times, sounded
bolder and more ambitious, a demand for China to clean up its state-owned banks,
build a sophisticated market for trading currencies, and let Wall Street firms
become full-fledged players in China.
Concluding the 17th Session of the China-US Joint Economic Committee in
Beijing, China and the United States agreed that exchange rate policy was a
sovereign decision, but can have a global impact.
Excess volatility and disorderly movements in exchange rates are undesirable
for economic growth, the two countries officials reaffirmed in a joint
For two years, Snow has pushed and prodded Chinese authorities to let its
currency float more freely. On Monday in Beijing, he declared his satisfaction
and changed the subject.
By closely linking the narrow issue of the currency to long-term goals of
China’s "financial modernization," the Bush administration has come to realize
that China could only adopt a floating exchange rate gradually in a span of