REUTERS
China sought to ease concerns that its sagging economy would translate into slower global growth and signaled it won't get dragged into tit-for-tat currency devaluations, Bloomberg reported.
Yi Gang, deputy governor of the Chinese central bank, said Friday that his country's economy is solid despite the stock market selloff and the yuan will be stable. He spoke in an interview in Ankara where finance ministers and central bankers from the Group of 20 countries are meeting, according to the report.
"The Chinese economy's fundamentals are fine," Yi said.
"No one can predict exactly on the market volatility, but I'm confident that the renminbi exchange rate will be more or less stable around the equilibrium level," he said.
The deepening slowdown and devaluation in China are chilling investors' sentiment, contributing to currencies volatility and leaving the MSCI emerging market index down more than 16% so far this year, according to the report.
Emerging markets from China to Brazil have now slid amid declining trade, increasing debt, falling commodity prices and a rising U.S. dollar. The selloff in equity markets is already prompting parallels to be drawn with the Asian financial crisis of the 1990s.
"The Chinese slowdown is going to be a bumpy landing but something short of a rough landing," Nouriel Roubini, chairman of Roubini Global Economics, said in an interview in Cernobbio, Italy.
"Markets are now becoming too pessimistic about Chinese economic growth and the ability of their policy authorities to manage that growth slowdown and also manage the movements of the currency and stock market," he said.
China's slowdown comes as the Federal Reserve is considering raising interest rates in the U.S. for the first time in nine years.
"In line with the improving economic outlook, monetary policy tightening is more likely in some advanced economies, which may remain one of the main sources of uncertainty in financial markets," the G-20 draft communique said.
Complicating the outlook is China's surprise August decision to revalue the yuan, which caused the currency to drop the most in 21 years, triggering exchange-rate declines in the emerging world on concern that a weaker yuan will hurt exporters.
All the same, the deputy central bank governor, Yi, forecast the economy would grow by 7% this year. That would still make China the second-fastest economy in the G-20, according to International Monetary Fund forecasts.
"You see a lot of things happen in China making a lot of people outside of China concerned," former Sinopec Chairman Fu Chengyu said in a television interview.
"But actually if you look into the details, the fundamentals of the economy, it doesn't change much."