China seeks to assure G20 over economy

China is a main focus of the G20 meeting, in light of recent global concerns about its waning growth momentum, yuan currency policies and overall market stability.

Central bankers and finance ministers from the G-20 advanced and emerging nations are gathered for talks in Shanghai, with a final communique expected at the conclusion of sessions on Saturday. Instead, the communist government had to scramble to defend its reputation for competence following stock market and currency turmoil.

A key worry, despite repeated Chinese denials, is that Beijing will allow its yuan to decline in value to support struggling exporters.

China’s currency has been heading south since the country revamped the foreign exchange mechanism a year ago, and concerns about capital outflows have been on the rise.

“In summary, at this meeting, the G20 recognized that while the global recovery continues, it remains too weak and uneven-and falls short of our collective ambition for strong, sustainable and balanced growth”.

Others at the meeting include U.S. Treasury Secretary Jacob Lew and Federal Reserve Chairwoman Janet Yellen; China’s finance minister, Lou Jiwei, and central bank governor, Zhou Xiaochuan; Mario Draghi of the European Central Bank and their counterparts from Europe, South Korea, India and South Africa.

Last week the 34-member Organisation for Economic Cooperation and Development cut its 2016 global growth forecast from 3.3 percent to 3.0 percent.

While facing a variety of risks and challenges, Premier Li pledged that China will further capitalize on its strengths: great economic potential as well as strong resilience and structural flexibility. On Thursday, its main market index fell by an unusually large daily margin of 6.4 percent.

The ruling Communist Party is in the midst of a marathon reform plan aimed at transforming China into a consumer-led economy and reducing reliance on trade and investment.

Speaking at a separate event earlier Friday, Zhou assured his audience the Chinese economy is robust after last year’s growth slowed to a 25-year low of 7.3 percent.

“There is no basis for persistent [yuan] depreciation from the perspective of economic fundamentals”, Mr. Zhou said. “The Chinese economy will continue to grow at a moderate-to-high pace”. Monetary policy alone can’t bring balanced growth, according to the document, which one person participating in the drafting process said would see only minor revisions. He urged other countries to deliver on promises of pro-growth structural reforms instead of relying on monetary and fiscal policy to boost growth.

“Talking about further stimulus just distracts from the real tasks at hand”, Germany’s Minister of Finance Wolfgang Schaeuble said, rebuffing a recommendation from the International Monetary Fund (IMF) that the G20 should start planning now for a coordinated stimulus program. Most are sceptical about the chances of any meaningful agreement on monetary policy and say currency volatility, but without any clear trend, is likely to persist.

“It doesn’t seem the meeting offers concrete, deliverable or coherent solutions to boost growth”, Raymond Yeung, senior economist at Australia & New Zealand Banking Group Ltd.in Hong Kong, told Bloomberg, adding: “I doubt whether it will have a meaningful impact on the market in the near term”.

“We think they should go bold, they should go broad and they should go together”, said Lagarde.

Structural reforms have become even more pressing given the disappointing state of the global recovery, she said.