‘All pol­icy tools’ to aid growth push

PBOC of­fi­cial: G20 mem­bers ready to work as one for bal­anced, sus­tain­able de­vel­op­ment

China Daily (USA) - - FRONT PAGE - By WANG YANFEI in Bei­jing wangyan­fei@chi­nadaily.com

China and other key economies are ready to strengthen “pol­icy level co­or­di­na­tion” to­ward bal­anced and sus­tain­able growth in global busi­ness, a se­nior cen­tral bank of­fi­cial said on Thurs­day.

G20 mem­bers agree with one another that they must “use all pol­icy tools to sup­port growth”, said Yi Gang, vice-gov­er­nor of Peo­ple’s Bank of China, in the run-up to the G20 Lead­ers Sum­mit on Sun­day and Mon­day in Hangzhou, Zhe­jiang prov­ince.

By all pol­icy tools, he was re­fer­ring to mone­tary and fis­cal pol­icy and, in the long run, mea­sures to boost struc­tural re­form of the international fi­nan­cial sys­tem, Yi said.

“This marks a mile­stone in the G20’s re­cent his­tory of macroe­co­nomic pol­icy co­or­di­na­tion,” he said.

At the same time, China stands with other G20 mem­bers in their op­po­si­tion to com­pet­i­tive de­val­u­a­tion of cur­ren­cies, and the coun­try is com­mit­ted to the yuan’s mar­ket-based ex­change rate, he said.

Com­pet­i­tive de­val­u­a­tion of­fers “no hope” for solv­ing the prob­lems fac­ing the world econ­omy to­day, Yi stressed.

The level of the yuan’s ex­change rate has re­mained by and large sta­ble against other ma­jor cur­ren­cies — more so than most re­serve cur­ren­cies — said Yi, adding that the yuan is also more sta­ble com­pared with the cur­ren­cies of many emerg­ing mar­ket economies.

China is also will­ing to com­mu­ni­cate and co­or­di­nate more closely with other ma­jor economies re­gard­ing the yuan’s ex­change rate, he said.

How­ever, with a wide pol­icy tool kit from which to choose, each coun­try has a flex­i­ble space to adopt poli­cies ac­cord­ing to their own cir­cum­stances, Yi noted.

He said China’s per­spec­tive is that macro poli­cies can be ef­fec­tive in boost­ing slug­gish de­mand in the short term, but tools for boost­ing sup­ply-side re­form would be more help­ful in achiev­ing long-term eco­nomic growth.

Com­ment­ing on China’s pledge to not en­gage in com­pet­i­tive de­val­u­a­tion, Lian Ping, chief econ­o­mist with Bank of Com­mu­ni­ca­tions, said it re­flects China’s will­ing­ness to play the role of a re­spon­si­ble large econ­omy.

“China is play­ing a lead­ing role in help­ing the world avoid a war of cur­rency de­pre­ci­a­tion,” he said.

Al­though a weaker cur­rency could be some­what help­ful for a na­tion’s ex­port busi­ness, its ben­e­fit to the over­all econ­omy would only be mar­ginal, Lian said.

“China has more im­por­tant goals to achieve. Con­sid­er­ing those more im­por­tant goals, not seek­ing a govern­ment-en­gi­neered de­pre­ci­a­tion of the yuan is a fully ra­tio­nal thing for China to do. It will bring about last­ing ben­e­fits for the coun­try and the world,” Lian said.

Yi Gang, vice­gov­er­nor of Peo­ple’s Bank of China

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