- The Washington Times - Wednesday, July 8, 2015

The ongoing turmoil in China’s stock markets goes not pose an immediate threat to the U.S. economy, Treasury Secretary Jacob Lew said Wednesday, but cautioned it could slow the pace of market reforms in China in the long run if things do not stabilize.

China’s markets are still pretty much separated from world markets,” Mr. Lew said during a discussion at the Brookings Institution. “They’re obviously moving towards being more integrated, but right now they’re not. I think the concern that is a real one is, what does it mean about long-term growth in China? How do Chinese policy makers respond to this and what does it mean for the core condition of the economy?”

Mr. Lew stressed that while Chinese market instability will not immediately affect the U.S. economy, it could pose a long-term threat to much-needed economic reforms that the Obama administration would like to see Beijing pursue.

“They’re moving from a heavily centralized industrialized economy slowly to a more market-oriented and consumer-oriented economy. It will lead to slower, but hopefully a more sustainable level of growth, which will also improve the economic conditions of the Chinese people and be a boost to the global economy. If the reaction [to the markets] is to put the brakes on reforms, it will slow that process,” Mr. Lew said.

China’s stock markets continued their slide Wednesday despite another round of intervention by the government to try to prop up values. The market, especially for smaller issuers, was one of the hottest in the world earlier this year, but began a steep decline last month.

Hundreds of companies have halted trading in their stock after emergency measures announced last weekend failed to stop a rout that has dragged down the benchmark Shanghai Composite Index by more than 30 percent since early June, The Associated Press reported.

Concerns about China and the continuing Greek debt crisis helped push down U.S. stocks in morning trading Wednesday, with the Dow Jones industrial average falling over 170 points, or nearly 1 percent, in the first 90 minutes of trading.

U.S. and Chinese officials convened in Washington two weeks ago for the seventh meeting of the U.S.-China Strategic and Economic Dialogue to discuss key issues and address the economic challenges facing both nations.

Read more: https://www.washingtontimes.com/news/2015/jul/8/jacob-lew-plays-down-threat-us-china-market-panic/#ixzz3fLa1mkd0
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