Dodging critics, China meets its G-20 goals
SHANGHAI: China pulled off a defensive win at the Shanghai Group of 20 meeting of global finance leaders after months of angst abroad over its economic and policy direction. For starters, there was no specific concern over China in the communique released late Saturday. Indeed, the G-20 said that "growth in key emerging market economies remains strong." Though concerns about China's yuan policy have roiled markets repeatedly since an August devaluation, the statement had only generic reference to refraining from competitive devaluations.
China won support for its goals for the G-20 meeting, such as examining broader use of the International Monetary Fund's reserve-currency unit -- to which the yuan will be added this year. A green finance study group has also been established after strong backing from China, which is looking for ways to clean up its polluted rivers and smoggy skies. Arguably the biggest win: following calls round the world for China to improve communication on its policies and intentions, its officials won kudos for their remarks. U.S. Treasury Secretary Jacob J. Lew said China communicated its policies well at the two-day gathering. And Asian stocks rallied when, hours before the first G-20 session, Central bank Governor Zhou Xiaochuan highlighted scope for further actions if needed, and co-host Lou Jiwei flagged additional fiscal firepower is on the way.
"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. The communique's embrace of structural reforms, infrastructure investment and acknowledgment of the limitations of monetary stimulus reflected the host nation's own policy views. Premier Li Keqiang, speaking in a prerecorded video shown Friday, said quantitative easing policies can't remove structural obstacles to growth and may lead to negative spillovers.