China’s fiscal spending will grow faster than expected this year, the country’s Finance Minister told the G20.
The Chinese economy has entered a “new normal” status and the growth rate of economy is predicted to be around 7 per cent in the coming 4 to 5 years, said Lou Jiwei in a written Ankara on Saturday.
Zhou Xiaochuan, China’s Central Bank governor pointed out in a written joint statement that the renminbi is not on course for a long-term devaluation.
The Shanghai Composite Index has tumbled 39 per cent since June 12, when the gauge reached its highest level in more than seven years. China’s surprise decision to revalue the yuan as it tried to contain the market turmoil caused the currency to drop the most in 21 years last month.
“But there is no substantial transformation in the real economy of China and large surplus still remains in the foreign trade of China, so there is no foundation that RMB will keep devaluing for a long term,” Zhou said.
“The status of Chinese economy is till in predication. The Chinese Economy has entered a “new normal” status and the growth rate of economy is predicted to be around 7 per cent in the coming 4 to 5 years,” Chinese Finance Minister of Lou Jiewei said in the joint statement.
Lou announced that the Chinese government spending will rise 10 per cent this year, more than the 7 per cent growth budgeted at the start of the year.
China has been taking measures to prevent its economy from systematic risk including the PBOC providing liquidity to the market through multiple channels.
The Chinese economy will go through “labour pains” in the next five years as Beijing aims to complete main structural reforms by 2020, Lou added.
The quality of growth, however, is already improving with 7 million jobs created in the first half of the year, consumption overtaking investment in contributing to economic growth and the balance of payments becoming more even, he said.
“G20 financial ministers and central bank governors have talked about the economy problems in China and we are not pessimistic about China keeping the 7 per cent growth rate in the future,’ Deputy Prime Minister of Turkey Cevdet Yilmaz said in a press conference Saturday in Ankara following talks.
TBP and Agencies