China began signaling what its officials plan to present to counterparts at the two-day Group of 20 meeting starting Friday in Shanghai, laying out a platform for more government spending and renewed pledges of currency stability.
Notably rejected in comments from Finance Minister Lou Jiwei published Thursday was a proposal that emanated from some private-sector analysts for a grand, 1985 Plaza Accord-style deal among G-20 members to guide exchange rates.
Vice Finance Minister Zhu Guangyao said fiscal stimulus should be deployed to boost global growth, while Yi Gang, the deputy central bank governor, said China will maintain a relatively stable currency as it embraces market forces.
Clouding what should have been China’s chance to showcase its agenda, the nation’s stocks plunged anew on the eve of the meetings of central bank chiefs and finance ministers, as surging money-market rates signaled tighter liquidity.
“The stock slump has been triggered by the disappointment of investors in the government’s ability to deliver economic reforms,” said Hong Kong-based Lu Ting, chief economist at Huatai Securities Co.
How policymakers should respond to weakening global demand is set to dominate the agenda at the Shanghai meeting. Bank of Japan Governor Haruhiko Kuroda on Thursday called for a dialog on China’s economy at the G-20 meeting.
“The nation is going through various structural changes,” Kuroda told lawmakers in Tokyo.
