“The Chinese economy has great potential, resilience and flexibility, and we will capitalize on such strengths”, Chinese Premier Li Keqiang said in a video message to the G20 Finance Ministers and Central Bank Governors Meeting.
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“China will strike a balance between growth, restructuring and risk management”, Zhou said at a conference held by the Institute of International Finance (IIF) in conjunction with the G20 meeting.
Schaeuble was at odds with the United States, Britain and China, which all backed the use of monetary and fiscal tools to fight a downturn, as well as structural reforms.
Overhanging the summit of major economy finance ministers and central bankers are global concerns about China’s ability to manage its domestic markets, currency and commitment to wider restructuring reforms.
There is a high possibility that the euro zone and China will loosen monetary policy further after Japan introduced negative interest rate.
“Monetary policies will continue to support economic activity and ensure price stability. but monetary policy alone can not lead to balanced growth”, it added.
“While recognising these challenges, we nevertheless judge that the magnitude of recent market volatility has not reflected the underlying fundamentals of the global economy”, the draft said.
Zhou Xiaochuan hinted at a wider budget deficit for 2016 and mentioned plans of reducing overcapacity in the economy.
China’s central bank chief promised Friday to avoid weakening its yuan to boost sagging exports as he tried to reassure nervous financial markets about his government’s handling of its economy and currency at the start of a closely watched gathering of global finance officials.
At the meeting of G20 finance ministers and central bank governors, Indonesia will also call for global commitment to infrastructure financing to spur economic growth, he said. “In most advanced economies, hard structural reforms have been deferred”.
“Fiscal as well as monetary policies have reached their limits”, he said. “We will not resort to competitive devaluations to boost our advantage in exports”. “We’ll get supportive statements on the growth outlook remaining decent and. we’ll hear that policy options are still available if growth were to take a much more significant dip downwards”, said Alvin Tan, a currency strategist with French bank Societe Generale in London.
China pulled off a defensive win at the Shanghai Group of 20 meeting of global finance leaders after months of angst overseas over its economic and policy direction. Instead, many were urging faster progress on pro-growth structural reforms instead of relying on monetary and fiscal policy to boost growth.
“At least you could say China has won defensively – but it’s still too early to tell whether one can call this a victory”, said Lu Zhengwei, chief economist at Industrial Bank Co Ltd in Shanghai. “So my sense is that there was in the room, a renewed sense of urgency, and a renewed sense for collective action”, Lagarde said.
The G20 meeting was a “platform for communication”, he said, but could not restrain any of its members and the communique “won’t have a big impact on (the) world economy”.
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By 2015, China’s economic growth fell to the lowest since 1990 to 6.9%. Lagarde said there is urgent need for G-20 countries to accelerate structural reforms. Concerns about its slowing economy and confusion over its currency policy were among the factors which sowed turmoil in global markets in January.
