As Chinese President Xi Jinping touched down in Seattle on Tuesday for his first visit to the U.S., Treasury Secretary Jack Lew urged the People's Republic not to stray from its pledge to develop a more market-oriented economy driven by consumption, a shift from the country's historical reliance on exports and infrastructure development. He also expressed concerns to CBS News about China's potential role in recent cyberattacks in the U.S.
"I think that there's every reason that China economy can be strong in the future and should be strong in the future, but it does require sticking to a reform agenda which they outlined over the last two-and-a-half years and now they need to re-commit to," Lew told CBS News.
Xi is scheduled to meet with President Obama at a White House state dinner in Washington on Friday. Xi, who is also China's Communist Party chief, was welcomed in Washington state by the U.S. ambassador to China, Gary Locke. Xi was scheduled to give a speech Tuesday evening co-hosted by the National Committee on U.S.-China Relations and U.S.-China Business Council for business leaders and other dignitaries, including U.S. Commerce Secretary Penny Pritzker and former Secretary of State Henry Kissinger.
In his interview with CBS News, Lew reiterated the Obama administration's wishes that China refrain from competitively lowering the value of its currency, the renminbi, in a bid to boost its economy. Amid a slump in trade, China's central bank last month devalued the renminbi, triggering its biggest single-day decline in a decade. The move heightened long-standing concerns that the People's Republic manipulates its exchange rate to support economic growth and control unemployment.
"They need to have an exchange rate where they're willing to let it go up, as well as down, when market forces determine," Lew said in a wide-ranging discussion with CBS News that also touched on the state of the U.S. economy and what historical figure would be chosen to put on the $10 bill.
China also has intervened in recent months to support domestic stock prices, which have fallen sharply since June shooting up more than 100 percent over the last year.
Lew expressed confidence that China's slowing economy, which has raised concerns about global growth and roiled financial markets, would rebound.
China's economy is "now roughly 30 percent consumer driven -- our economy is 70 percent consumer-driven," he said. "So they're on a path that's going to be challenging. It means the rate of growth will come down, but the quality of growth should become stronger. They have to continue to open up their markets to competition. They have to continue to take steps that give consumers the ability to spend money more easily and invest money more easily."
Another hot-button issue expected to arise during Xi's visit are allegations of cyberespionage by China against the U.S. Measuring his words carefully, Lew described China's activities in that realm as "problematic."
"We have said the theft of trade secrets, of commercial secrets, is a very serious matter," Lew said. "The president entered into an executive order that gives authority to me to impose sanctions on firms, on individuals who engage in that activity, and we are looking at whether or not actions are warranted and when actions need to be taken."
Lew said the U.S. government is continuing to investigate potential cases of cyberhacking by China and other countries, while declining to indicate if the U.S. will administer sanctions and cautioning against rushing the probe.
"The sanctions would have to be imposed on individuals or organizations where you can make the direct link to the actions that have been taken, and it means building a legal case, it means having a record that's strong," he said.