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Premier Li explains currency issues to IMF chief

Updated: Jan 28,2016 8:19 PM     Xinhua

Premier Li Keqiang on Jan 28 talked with International Monetary Fund (IMF) Managing Director Christine Lagarde on the phone upon her request about the global economic and financial situation and that in China.

The Premier said that the world economy, which is in the middle of deep adjustments, remains in a complicated situation, weighed down by a weak recovery and rising uncertainties. An international consensus has emerged on the need to bolster growth, take forward restructuring and enhance cooperation.

He said that China’s economy has been deeply integrated into the global economy. Alongside the slow-down in growth of the world economy and trade and heightened volatility in international financial markets, China’s ability to deliver a medium-high growth of 6.9 percent, solid employment, higher income and savings growth than gross domestic product, and steadily improving environment last year came as no mean feat.

The Premier pointed out that reform holds the key to China’s development.

In the face of downward pressure on the global economy and deep-seated imbalances at home, China will toughen its resolve, rise to the challenge, and tap into the huge potential, resilience and room for maneuvering of the Chinese economy through a combination of policy measures, he said.

“While expanding aggregate demand in an appropriate way, we will vigorously pursue structural reform, particularly supply-side structural reforms,” he said.

The Premier said China will continue to implement a proactive fiscal policy and prudent monetary policy, push forward the innovation-driven development strategy, and encourage mass entrepreneurship and innovation to unleash people’s enthusiasm and creativity.

All these will help to generate new and stronger impetus for development and upgrade traditional growth drivers, making it possible for China to maintain continued steady growth of its economy, he said.

When talking about the RMB exchange rate, Premier Li stressed that the Chinese government has no intention of boosting exports by devaluing the yuan. Still less would China go for a trade war. The fact is the RMB exchange rate has remained basically stable against a basket of currencies. And there is no basis for continuous depreciation of the RMB.

“We will press ahead with the reform of the RMB exchange rate formation mechanism in line with the principles of independence, gradualism and controllability, enhance communication with the market, and keep the RMB exchange rate basically stable at an adaptive and equilibrium level,” he said.

Premier Li commended the active role the IMF has played over the years in boosting global growth and maintaining financial stability. He said that the Chinese government will deepen dialogue with the IMF and other international institutions on economic development and macro policies, and work with other countries and parties to send positive signals for world economic recovery and growth and strengthen market confidence.

Lagarde expressed confidence in the steady growth of the Chinese economy through the implementation of such effective measures as robust macro policies, structural reform, a coherent exchange rate policy, and enhanced communication with the market.

The IMF will step up communication and cooperation with China to jointly convey to the market the commitment to reform and confidence in growth, she said.

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