Zhou Xiaochuan, governor of People’s Bank of China promised finance officials from the United States, Japan, Europe and other major economies that he would avoid weakening the yuan to boost sagging exports. Speaking at the start of the closely watched G20 meeting, Zhou tried to reassure nervous financial markets about Beijing’s handling of its economy and currency.
The communist government is scrambling to defend its reputation for economic competence after a spate of stock market and currency turmoil and a key worry, despite repeated denials, is that Beijing will allow the yuan to decline in value to support struggling exporters.
Zhou said the representatives at the G20 meeting should focus on managing bleak global demand, structural economic reforms and “promoting sustainable and balanced growth.”
China’s stocks plunged anew on the eve of the Feb. 26-27 meetings as surging money-market rates signaled tighter liquidity.
According to Hong Kong-based Lu Ting, chief economist at Huatai Securities Co, "The stock slump has been triggered by the disappointment of investors in the government’s ability to deliver economic reforms. Any recovery in the stock market will rely on concrete outcomes of reforms, not empty talk."
OECD
Meanwhile, the Organization for Economic Cooperation and Development (OECD) called on the world's 20 biggest economies to step up the slowing pace of reforms to boost economic growth amid sluggish trade and weak investment.
"The case for structural reforms, combined with supporting demand policies, remains strong to sustainably lift productivity and the job creation," said the OECD report, prepared for the G20 meeting.