Reports that top Chinese presidential aide Liu He has been chatting with US Treasury Secretary Jacob Lew over China’s exchange rate policies has led many to believe that President Xi Jinping may be nudging Premier Li Keqiang to the side and taking a more hands-on role in China’s economic affairs

On Monday, Chinese and US media reported that Xi’s right-hand man on the economy chatted with Lew, but few details were released on the conversation

Liu He
Liu He

China’s main liaison with Lew on economic and policy issues has been vice-premier Wang Yang, a Li man. Wang spoke on the phone with Lew from August to December last year. He also represented China as Lew’s counterpart in the China-US Strategic and Economic Dialogue over the last three years.

Bloomberg, citing an emailed statement by the US Treasury Department, reported that the two discussed “the importance of China clearly communicating its policies and actions to the market” as Beijing reforms its yuan regime.

“[Lew and Liu] also discussed the status of economic reform in China, and Lew reiterated the importance of China supporting household income and rebalancing towards consumption-led growth, including through appropriate fiscal policies,” the department said. “Lew expressed confidence that if China implements the reforms it has set out, it has the necessary tools to support domestic demand and succeed in this economic transition. [He] was encouraged by assurances that China remains committed to these structural reforms and discussed President Xi’s pledge in September to avoid competitive devaluations, and not to weaken China’s currency in order to boost its exports.

“Lew added that the US supports China’s current G-20 presidency and looks forward to working closely with China to promote strong, sustainable, and balanced global growth and address the shortfall in global aggregate demand.”

Liu serves as chief of the General Office serving the Leading Group for Financial and Economic Affairs, a group Xi personally heads. Regarded as a key figure in China’s economic policy-making, Liu usually works behind the scenes.

Wang is a deputy for Premier Li Keqiang at the State Council. However, the news of Liu talking with Lew suggests that he may soon take on more front line duties and that Li maybe getting sidelined from decision making as Xi becomes more hands-on in economic and financial affairs.

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