Abu Dhabi, UAEWednesday 18 September 2019

WEF 2016: finance leaders call for China to improve communication standards

Chinese authorities urged to improve their communications with global markets to head off any further downturn after a week of market turmoil.
IMF managing director Christine Lagarde looks on during a session at the World Economic Forum annual meeting in Davos. AFP
IMF managing director Christine Lagarde looks on during a session at the World Economic Forum annual meeting in Davos. AFP

DAVOS // Leaders of international finance assembled at Davos urged the Chinese authorities to improve their communications with global markets to head off any further downturn after a week of market turmoil.

As share prices in many stock markets headed into bear territory, Christine Lagarde, the managing director of the IMF, told Chinese officials at the World Economic Forum annual meeting that they had a responsibility to clarify their moves in equities and foreign exchange markets.

“This is a communications issue. Better and more communications would serve the transition better,” she said, in a reference to the country’s policy towards the depreciating yuan, one of the factors that has spooked global markets.

Her call was echoed by Gary Cohn, president of the American investment bank Goldman Sachs. “Communication is really what’s important here. We all want greater clarity if China is to stick with its transition,” he said. Many western financiers have been suspicious of the accuracy of official Chinese economic data.

Ms Lagarde said the IMF believed China’s move from an export-led economy to a domestic consumer market was “manageable” with the right government policies. The IMF recently held its GDP forecast for the country at 6.9 per cent, while it cut global forecasts to 3.4 per cent.

China – an increasingly important trading partner for the UAE – became the world’s second largest economy after two decades of double-digit economic growth.

The IMF call was given a receptive hearing from Chinese regulators at the meeting. “You’re right, we should do a better job and we are learning,” said Fang Xinghai, vice chairman of the China Securities Regulatory Commission. “Our system isn’t structured in a way that’s able to communicate seamlessly with the market.”

Mr Fang added that further devaluation of the yuan was not in the best interest of China.

Jiang Jiangqing, chairman of the Industrial and Commercial Bank of China, said the country’s economic transition was challenging. “It’s very difficult. It will take courage to solve.”

fkane@thenational.ae

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Updated: January 21, 2016 04:00 AM

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