China sees no grounds for long-term yuan depreciation, says finance vice-minister

PUBLISHED : Wednesday, 31 August, 2016, 4:07pm
UPDATED : Wednesday, 31 August, 2016, 11:04pm

China’s economic fundamentals remain sound and there is no basis for a long-term depreciation of the yuan, despite increased global uncertainties, Finance Vice-Minister Zhu Guangyao told state television in an interview.

“China’s economic fundamentals are sound. There is no basis for long-term depreciation in the renminbi ,” Zhu said, adding that China is able to achieve its annual economic growth target of at least 6.5 per cent between 2016 and 2020.

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Beijing would continue to pursue supply-side structural reforms which would boost China’s long-term growth, he said.

The global economy is facing increased uncertainties due to Britain’s decision to leave the European Union and over the Federal Reserve’s policy outlook, Zhu said.

Globally, the focus is on an expected Fed rate increase, Zhu said, but he added that any rise would be small.

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The yuan slipped to near six-week lows on Monday against a broadly firmer dollar after Fed Chair Janet Yellen said the case for a rate increase had grown stronger in recent months.

The yuan hovered near 6.68 per US dollar on Wednesday, slightly off the six-week low.

“The world has huge expectations for the G20 summit in Hangzhou, at a time when the global economy faces increased uncertainties and increased downward pressure,” Zhu said.

Chinese officials have signalled that the Group of 20 summit, to be held in the eastern city of Hangzhou on Sunday and Monday, would focus on boosting economic growth and other financial issues rather than disputes such as the South China Sea.