China seeks to calm global markets
ANKARA — China sought to ease concerns that its slowing economy could drag down global growth and signalled it won’t get dragged into tit-for-tat currency devaluations.
Yi Gang, deputy governor of the Chinese central bank, said Friday that his country’s economy is solid despite the stock market sell-off and the yuan will be stable. He spoke in an interview in Ankara where finance ministers and central bankers from the Group of 20 nations are meeting.
“The Chinese economy’s fundamentals are fine,” Yi said. “No one can predict exactly on the market volatility, but I’m confident that the renminbi exchange rate will be more or less stable around the equilibrium level.”
The deepening slowdown and devaluation in China are chilling investors’ sentiment, roiling currencies and leaving the MSCI emerging market index down more than 16 per cent so far this year. A draft communique prepared before the meeting cited “recent volatility in financial markets” and the need to monitor potential spillovers.
Policy- makers will discuss the problems in China without directly referencing them in the final statement, according to a member of the Russian delegation. The Chinese asked for their problems not to be mentioned directly, a euro- area official said.
The Chinese currency gained 1.5 per cent against the dollar through Sept. 2 since reaching a four-year low of 6.4510 yuan on Aug. 12.
“We will surely discuss the situation in China more intensively and we will listen closely to the view the Chinese authorities have themselves,” German Finance Minister Wolfgang Schaeuble said.
Once the darlings of the world economy as they helped lift it from its 2009 recession, emerging markets from China to Brazil have now slid amid declining trade, mounting debt, falling commodity prices and a rising U.S. dollar. The sell-off in equity markets is already prompting parallels to be drawn with the Asian financial crisis of the 1990s.
“The Chinese slowdown is going to be a bumpy landing but something short of a rough landing,” Nouriel Roubini, chairman of Roubini Global Economics, said in an interview in Cernobbio, Italy. “Markets are now becoming too pessimistic about Chinese economic growth and the ability of their policy authorities to manage that growth slowdown and also manage the movements of the currency and stock market.”