US Treasury Secretary Jack Lew has called upon China to be more transparent on its Foreign Exchange policy. In a telephonic conversation with Chinese Vice Premier Wang Yang on 2 February evening, Lew reiterated the importance of China moving to a market-determined exchange rate in an orderly and transparent fashion, the Treasury stated on 3 February.
The Treasury added that Lew asked the world's second largest economy to explicitly communicate its actions to financial markets and its exchange rate policies. The Xinhua News Agency, the official press agency of the People's Republic of China, reported about this phone call later in the day on 3 February. According to its report, Wang said Beijing was capable of keeping the renminbi "basically stable at a reasonable and balanced level".
The news agency added that the telephonic conversation also included talks about how both the countries could boost business ties between them, one of them being on how to push the bilateral investment treaty, which had been discussed in 2015.
Stock markets in mainland China went into a trading halt on 7 January. Analysts said the slump was prompted by the Chinese central bank's surprise devaluation of the yuan by 0.5% against the US dollar on 6 January, which took the currency to its lowest level in more than five years. CNBC had then stated that such devaluation moves by China could send the global economy into recession.
Bernard Aw, a market analyst at trading firm IG in Singapore, had then said: "As long as markets continue to hold the view that China is inclined to devalue the yuan further, we will see worries of lesser purchasing ability from China as well as fears that other economies may start weakening their currencies, sprouting a currency war."