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Friday, February 26, 2016, 21:00

Li says G20 must improve policy coordination

By Agencies

Li says G20 must improve policy coordination
Participants from left to right, Moderator Yingyi Qian, Chinese Finance Minister Lou Jiwei, German Finance Minister Wolfgang Schaeuble, International Monetary Fund (IMF) First Deputy Director David Lipton, World Bank Managing Director Sri Mulyani Indrawati and Breugel Director Guntram Wolff compose a panel during a session of the G20 High-Level Seminar on Structural Reform, ahead of the G20 Finance Ministers and Central Bank Governors Meeting at the Pudong Sha ngri-la Hotel in Shanghai, China, Friday, Feb. 26, 2016. (Rolex Dela Pena/Pool Photo via AP)

SHANGHAI - Chinese Premier Li Keqiang said on Friday major economies should be mindful of the spillover effects of their policies, improve their coordination and stand together to "tide over difficulties".

Li, in a video message at the opening session of a meeting of G20 finance policymakers, said although economic growth was slowing, China has the confidence to handle the complex situation at home and abroad.

He said there was no basis for continued depreciation of the yuan, and China would expand aggregate demand as appropriate and focus on supply-side structural reforms.

Earlier on Friday, China's central bank chief also promised not to weaken the yuan to boost sagging exports.

Zhou Xiaochuan's comments came as investors and foreign governments look to Beijing for reassurance about its economic and currency management following market volatility. A key concern abroad is that China might weaken its yuan to make its exports more attractive, hurting foreign competitors.

At a news conference, Zhou said, "We will not resort to competitive depreciation to boost our advance in exports."

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 US 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.

China's finance minister Lou suggested that structural reform was the best way to sustain economic growth in G20 countries.

Li says G20 must improve policy coordination

Chinese Finance Ministe r Lou Jiwei delivers a statement during a session of the G20 High-level Seminar on Structural Reform, preceding the G20 Finance Ministers and Central Bank Governors' Meeting in Shanghai on Feb 26, 2016. (AFP PHOTO / POOL)

Lou told the ongoing G20 Finance Ministers and Central Bank Governors Meeting that structural reform is crucial to a robust, balanced and sustainable economy, with governments working on coordinated top-down design.

He suggested removal of trade barriers and more encouragement for companies to invest.

China, he said, still has ample room for fiscal policy adjustment, is likely to raise the deficit ratio and will continue to cut taxes to support innovation and small businesses.

China raised its fiscal-deficit-to-GDP ratio to 2.3 percent for 2015, compared with the 2014 target of 2.1 percent, with the number expected to rise to 3 percent or more in 2016.

The finance ministry has plans to deal with mass redundancies as restructuring cuts capacity across a range of traditional heavy industries. Lou also pointed out that China's employment legislation needs to be improved to free up the labor market.

'FUNDAMENTALS REMAIN STRONG'

In separate comments at the G20 opening ceremony, Zhou tried to reassure his audience the Chinese economy is healthy after growth slowed to a 25-year low of 7.3 percent last year. He noted that it still was among the world's strongest performances.

"China's economic fundamentals remain strong and supportive of growth," he said. "The Chinese economy will continue to grow at a moderate-to-high pace."

The International Monetary Fund (IMF) released a report on Tuesday highlighting increasing risks to a global recovery and calling for urgent and bold action to support growth.

"The major economies of the world share an interest in boosting cooperation amid weak global economic recovery and volatile financial markets," said Gao Haihong, senior fellow at the Institute of World Economics and Politics under the Chinese Academy of Social Sciences.

The Chinese economy has experienced a relative slowdown as it presses ahead with its economic transformation, but its growth of 6.9 percent last year is still among the highest in the world.

The IMF managing director, Christine Lagarde, who was attending the Shanghai meeting, urged policymakers to speed up the pace of reforms.

"We think they should go bold, they should go broad and they should go together," said Lagarde. Referring to monetary and fiscal policy and structural reforms, she said, "There has to be action on all fronts."

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