Lew: US will hold China 'accountable' on exchange rate

US Treasury Secretary Jacob Lew says China's exchange rate policy and its economic reforms will figure in upcoming G20 talks

WASHINGTON - US Treasury Secretary Jacob Lew said Thursday that the United States would hold China responsible for the political and economic impact of its currency policies after last month's yuan devaluation.

"They have to understand, and I make this point to them quite clearly, that there's an economic and a political reality to things like exchange rates," Lew said in a CNBC interview that aired Thursday.

"They need to understand that they signal their intentions by the actions they take and the way they announce them," he said, referring to Beijing's sudden devaluation of the yuan, or renminbi, on August 11 that triggered shock waves in global markets.

The Chinese authorities "have to be very clear that they're continuing to move in a positive direction. And we're going to hold them accountable," Lew said.

Lew said that China's exchange rate policy and its economic reforms would figure in the discussions at the Group of 20 meeting of finance chiefs that opens Friday in Turkey.

"How they manage their exchange rate is a matter of great concern to us and that they need to be willing to let market forces drive the value up, not just drive it down," he said in the interview conducted Wednesday.

Since the yuan was allowed to sink about 2.8 percent against the dollar over three days last month, the rate has held almost unchanged, with the Chinese currency strengthening slightly since Monday.

The Treasury secretary pointed to the US economy's "continuing signs of strength" as a bright spot in the global economy where a number of countries are experiencing weak growth.

"We've (recently) had a consistent and quite stable series of indicators that the US economy remains strong," he told CNBC.

"We're seeing good, sustained job growth. And we're seeing increasingly strong consumer demand."

Lew's remarks came as the Federal Reserve plans to raise ultra-low interest rates this year, dependent on whether data supports the view that the economy is strong enough to weather the hike.

The Fed has held its benchmark federal funds rate at the zero level since 2008 in a bid to support the economy's recovery from the Great Recession.