Economic ties with China most important relationship in the world: US
Recognition that China has made important policy changes, and that they meet the standards of the IMF, US added.
Washington: Economic relationship between the world's two largest economies - US and China -- is likely the world's most important financial association according to the US Treasury Secretary Jacob Lew.
However, he said, that there were several challenges ahead for China as it transitions from a manufacturing economy to a consumer driven one and consequently its ties with the US.
-"US-China relationship is probably the most important economic relationship in the world since it involves the world's two largest economies,-" he said, while adding that to what extent China is able to push economic reforms remains to be seen.
-"I think the desire to be included in the Special Drawing Rights -- SDR - basket at the International Monetary Fund was a helpful incentive for China to make reforms in how it manages its currency. However it doesn't reflect completion of a reform agenda,-" Mr Lew said suggesting that China needs to do more.
-"It is an important step along the way, recognition that China has made important policy changes, and that they meet the standards of the IMF,-" he added.
The US has long maintained that China needs to allow market forces to play a more dominant role so that it can tackle the problem of excess capacity - stocks of products that are not required in any market.
-"China has changed the way it manages its exchange rate, so that's less of a hot issue today. But the real test is going to be when there is pressure on the Chinese renminbi to appreciate - does China let it appreciate The jury will be out until we see macro-economic circumstances that test that,-" he said.
On the issue of excess capacity building up in China's key manufacturing sectors the, the US Treasury Secretary said it was not a healthy sign.
-"Fundamentally, it's just not good for China. I believe there is still room for China to manage what is the hardest transition - from a heavily industrial to a much more consumer driven economy,-" he said, cautioning that China -"has space, but it is not infinite space-".