China said Friday its economic policies and reform agenda and returned to assure the world that the country’s government has plenty of policy tools to combat downward pressures when financial leaders of member nations of the Group of 20 (G20) met in Shanghai.
in a video message at the Meeting of Finance Ministers and Central Bank Governors of the G20, Chinese Premier Li Keqiang reiterated that China has the confidence to manage the complex internal and external economic situation.
“China’s economy has great potential, resilience and flexibility, and will capitalize on those strengths,” he said.
Today’s meeting takes place amid a weak global economic growth and increased volatility in financial markets. The International Monetary Fund (IMF) said earlier this week the growing risks to global recovery and asked to take urgent and bold action to support growth.
In January, the IMF forecast growth of 3.4 percent for the world economy this year, but could reduce the figure when it publishes its next forecast in April.
Li urged the G20 nations held together during the difficulties. “In formulating macroeconomic policy, G20 members need to keep in mind not only their own growth, but must also observe the side effects of their policies,” he said.
The continued turbulence in the stock market and the depreciation of the yuan in early 2016 did little to hide what could be a very difficult year, which put economic policies and the reform agenda of the country in the spotlight of today’s meeting.
PRUDENT MONETARY POLICY AND FLEXIBLE
In a press conference prior to the G20 meeting press, China’s central bank monetary policy described as “cautious trend with a slight easing”.
The change in the official tone, which in recent years had been defined as “prudent”, returns to the language on the consistent political stance with reality, said economist Bloomberg, Tom Orlik, in a study.
To stop the cooling of the economy, which in 2015 recorded its lowest annual expansion in a quarter century of 6.9 percent, China has cut benchmark interest rates and the requirement coefficient of bank reserves on several occasions since 2014.
Faced with the possible downside risks, China still has the space and tools for monetary easing, said central bank governor, Zhou Xiaochuan. He also stressed that China will not build “excessive” macroeconomic policies abroad economic performance or capital flows.
FISCAL EXPANSION
In addition to support monetary policy, Zhou Xiaochuan governor has asked to do more in the fiscal and structural reforms.
The message was echoed in the statements of China’s finance minister, Lou Jiwei. “In times of economic slowdown, the expansionary reforms such as reducing administrative authorizations, specific tax reductions and providing social services and benefits to rural migrant workers should have priority,” said the Chinese minister.
China still has room to expand fiscal policy in order to promote structural reforms, he said, and predicted an increase in the budget deficit this year.
China raised its budget deficit to 2.3 percent of gross domestic product (GDP) in 2015, up from 2.1 percent in 2014. A deficit rate of 3 percent is usually considered a limit that should not be crossed.
However, the director of studies and statistics of the central bank of China, Sheng Songcheng, suggested on Wednesday that China could raise the rate to 4 percent of GDP or even more to offset the impact of reduction in tax revenues and support comprehensive reform.
“The warning line of 3 percent does not correspond to the reality of China,” he said, and referred to the unpaid debt relatively small in China, the rational structure, the continuous growth solid tax revenues and assets of state enterprises, as some of the factors supporting its conclusion.
EXCHANGE
China’s currency has been directed downward since the country renewed the exchange rate mechanism last year, and concerns of capital outflows have increased.
Zhou reiterated today that there is no basis for the continued weakness of the Chinese currency since the economic foundation of the country remain strong. He also cited the current surplus of China’s current account and foreign exchange reserves as a solid support for the balance of international payments.
The HSBC believes that the renminbi could weaken moderately beyond the short term, given the challenges in the cyclical front and the balance of payments of China. Predicts that the exchange rate of the yuan against the dollar will be 6.9 at the end of 2016.
(Tian)
No comments:
Post a Comment