The US said China continues to focus its policies on exports, and called on its biggest economic rival to implement forceful measures to boost domestic demand.
“China’s recovery has been highly imbalanced” since the hit from the coronavirus pandemic, the US Treasury Department said in its semiannual foreign-exchange report. “Stringent containment measures enabled China to quickly resume manufacturing while domestic consumption lagged.”
While Chinese President Xi Jinping has championed what his government calls a “dual circulation” development model, in which the domestic economy serves as the main growth driver, the US Treasury had a different take. “China’s focus on policies that support external demand” contributed to the country’s widening current-account surplus last year, along with temporary effects from Covid-19, such as overseas demand for medical products.
“Lackluster private demand — underpinned by continued weakness in the labor market — raises concerns that China’s growth cannot be sustained absent greater official support for household consumption,” the Treasury said. “China should take decisive steps to allow for greater market openness by implementing reforms to reduce state intervention, enhancing social safety nets and increasing spending on healthcare and unemployment benefits, and permitting a greater role for market forces.”
China’s foreign-exchange reserves rose by $109 billion last year, compared with a gain of $180 billion in a separate gauge of foreign-exchange purchases.
US, China to cooperate to tackle climate change
The US and China are committed to cooperating to tackle climate change, they said in a joint statement after meetings between senior envoys last week.
The two nations will work together and with other parties to support implementation of the Paris Agreement and to promote a successful US climate change conference in Glasgow later this year, they said.
The US and China support the Paris Agreement’s aim to limit the increase in the global average temperature to below 2 degrees Celcius and to try to restrict it to 1.5 degrees Celcius, according to the statement.
The statement followed discussions in Shanghai between US presidential climate envoy John Kerry and his Chinese counterpart, Xie Zhenhua. Kerry’s visit was part of a tour that’s so far included India, the UK, Bangladesh and the United Arab Emirates.