U.S. Treasury Secretary Henry Paulson said on Wednesday that China is helping to power the strongest global growth in decades, but as a major economic participant, China must address the need for economic reforms.
Paulson, in prepared testimony before the House of Representatives Financial Services Committee, said he would continue to press China for greater flexibility in the exchange rate of its yuan currency, despite a decision not to label Beijing a currency manipulator in a recent report.
"While we agree with the Chinese on the direction of change in their economic reforms, we differ over the pace," Paulson said, adding: "I advocate an increased pace of reform at every opportunity."
Paulson also repeated his calls for China to accelerate reforms necessary to boost domestic consumption and reduce reliance on investment and exports to drive growth.
"I share your frustration about the pace of change in China," he told lawmakers.
Paulson also said accelerated growth in Europe and Japan has given the global economy more balance and stability. But both Europe and Japan also need more structural reforms and faster domestic growth on a sustained basis.
Addressing newly announced changes to the International Monetary Fund's foreign exchange monitoring principles, Paulson said they would help permit "firmer surveillance in areas such as insufficiently flexible exchange rate regimes or weak macroeconomic policies which do not adequately support the exchange rate regime."
He said the Bush administration will continue to emphasize that for the reforms to be meaningful, they must be carried through in the day-to-day surveillance work undertaken by IMF staff.
"Nothing is more important for the relevance of the IMFthan rigorous execution of its most fundamental responsibility," Paulson said.