China says it's not planning new stimulus measures so up to the US to drive global economy

BEIJING, China – China’s finance minister said Wednesday that the country is not planning any new stimulus measures and it is up to the United States to drive the global economy.

Lou Jiwei said that leaders are satisfied with the country’s economic performance so far this year and that in the first five months China had created up to 6 million jobs, 60 per cent of this year’s target.

Analysts say the ruling party appears willing to accept economic growth below its 7.5 per cent target this year so long as the rate of creation of new jobs stays high enough to avoid political tensions.

Lou said China, which is the world’s second-largest economy after the U.S., is emphasizing structural reforms to spur economic growth and is unlikely to repeat the kind of massive economic stimulus it did in the wake of the 2008 global financial crisis.

“Therefore the global economic recovery depends on the situation in the United States,” he told reporters at a briefing during an annual U.S.-China strategic and economic dialogue in Beijing attended by U.S. Treasury Secretary Jacob Lew.

Lou pointed out that the U.S. economy shrank at a 2.9 per cent annual rate from January to March — largely because of a brutal winter — and said China hopes the U.S. “can take measures to ensure the momentum of growth.”

He also said China hopes the U.S. can rebalance its economy by encouraging Americans to save more.

The finance minister said that during the talks Wednesday, U.S. officials had asked whether China still had to intervene in the foreign exchange rate — a longstanding issue between the two as the U.S. says Beijing’s controls on the yuan give Chinese exporters an unfair price advantage and hurt foreign competitors. Lou said that as China’s economy wasn’t in full health and capital flows weren’t yet normal, “it is very difficult for us to refrain” from foreign market intervention.

Domestically, Lou said that industries that have visibly suffered from a high-profile anti-corruption campaign spearheaded by President Xi Jinping, such as high-end hotels, tobacco and luxury liquors, have adapted to the conditions. “Some of the luxury hotels and restaurants have started to sell takeout food,” he added.

He gave no additional details about the progress of the campaign and the impact it might have on the economy at large.