Ahead of G-20 meeting of Finance Ministers and Central Bank Governors in Moscow later this week, US has said that China needs to do more than tweak current policy and bring conduct in trade and financial markets more into alignment with international norms.
“In the absence of offsetting demand growth from surplus economies, overall growth will remain weak. In China, recent data have reassured global markets,” US Undersecretary of the Treasury for International Affairs Lael Brainard said.
“China will need to do more than tweak current policy to continue meeting rising expectations inside China and at the same time bring China’s conduct in trade and financial markets more into alignment with international norms,” she said yesterday.
Brainard said China’s current account surplus has fallen from 10 per cent of GDP at the peak to under three per cent today, and the exchange rate has appreciated by 15 per cent against the dollar in real terms since June of 2010.
Noting that China’s fiscal and monetary policy should be reoriented to address domestic growth, Brainard said the decline in global growth has driven much of the adjustment and external imbalances.
“China faces significant structural head winds to achieve a durable shift from export and investment-led growth to sustainable consumption-led growth. It will be important that China further boosts household and demand and reinvigorate the move to market-determined exchange rates and interests rates,” Brainard said.