SHANGHAI (AP) — China’s central bank chief promised Friday to avoid weakening its yuan to boost sagging exports as he tried to reassure nervous financial markets about his government’s handling of its economy and currency at the start of a closely watched gathering of global finance officials.
Beijing wanted to use the gathering of finance ministers and central bankers from the Group of 20 rich and developing countries to promote its campaign for a bigger voice in managing global trade and finance. Instead, the communist government is scrambling to defend its reputation for economic competence after a spate of stock market and currency turmoil.
A key worry, despite repeated Chinese denials, is that Beijing will allow its yuan to decline in value to support struggling exporters. That expectation has driven an outflow of capital from China that spiked to a record $135 billion in December.
“We will not resort to competitive depreciation to boost our advantage in exports,” said Zhou Xiaochuan, governor of the People’s Bank of China, at a news conference.
Zhou said the meeting of finance officials from the United States, Japan, Europe and other major economies should focus instead on managing lackluster global demand, structural economic reforms and promoting “sustainable and balanced” growth.
Other officials attending the meeting include U.S. Treasury Secretary Jacob Lew and Federal Reserve Chairwoman Janet Yellen; China’s finance minister, Lou Jiwei, and their counterparts from Germany, Britain, Japan, South Korea, India and South Africa.
Economists complain the secretive Chinese government has fueled market volatility by failing to communicate policy changes clearly.
In a report ahead of the Shanghai meeting, the IMF urged G-20 leaders to support China’s economic reforms but also called on Beijing to “ensure clear communication of their exchange rate policies.”
Other governments have tried to reassure markets their governments have the means to combat an economic slowdown. They also are trying to douse expectations the Shanghai meeting will produce specific growth plans similar to the ones rolled out in 2009 in response to the global crisis.
Lew said in an interview broadcast Wednesday by Bloomberg Television that the meeting would likely produce “a more stable understanding of what the future may look like,” including greater clarity from Beijing about its plans.
However, Lew said he did not expect the discussions to produce specific plans of “what each country is going to do and how.”