Beijing - China’s finance minister defended the country’s currency interventions yesterday, saying that it was difficult to take a hands-off approach when it came to the yuan, given an unsteady economy and abnormal capital inflows.
Speaking on the first day of annual high-level talks between China and the US, Lou Jiwei said Beijing also faced challenges in managing inflows hot money of resulting from the winding down of super-loose US monetary policy.
“The US side has constantly raised the issue about whether intervention is no longer needed in our foreign exchange policy,” Lou said. “But we say it’s difficult when the economy has yet to fully recover, and cross-border capital flows are not normal.”
The value of the yuan has been a thorny issue in bilateral ties between the world’s two biggest economies, with US leaders saying that China suppresses its currency to boost its export sales.
Turning to the health of China’s economy, Lou said the days when China contributed to nearly half of global economic growth with big pump-priming projects were over.
While China aimed to grow its economy by about 7.5 percent this year, Lou reiterated the government’s earlier stance that the target was flexible and did not represent a minimum expansion rate that must be met. “The 7.5 percent growth target is not the lower limit.”
As such, he said he hoped US authorities could do their part to keep the US economy growing at a steady clip, and that Washington should be mindful of the spill-over effects of its ultra-loose monetary policy.
“We look to the US as the key for promoting global economic recovery. We hope the US side could take effective measures to maintain good growth momentum.” - Reuters