Dodg­ing crit­ics, China meets its G-20 goals

The Pak Banker - - FRONT PAGE -

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.

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