Washington: Finance ministers and governors from central banks of top countries have showed a rare anxiety on the implication of slowdown of the Chinese economy, the world's second largest, which may pose serious challenges to the global economy.
China after nearly three decades of rapid growth has been showing signs of slowness and India has now replaced China as the fastest growing major economies of the world.
As a result of the economic slowdown, the Chinese economic model, traditionally based on manufacturing, investments and exports, is currently transitioning towards a model focused on domestic consumption, services and innovation.
"This rebalancing, which is being implemented in a resolute manner, inevitably affects China's economic partners, even if it is still too early to determine its precise impact. Yet, in any event, we will have to be ready to accompany these development," the French Finance Minister Michel Sapin said in his address to the IMF yesterday.
Wolfgang Schauble, the German Finance Minister attributed global economic slowdown to the Chinese slowdown.
"This slowdown is related to the necessary ongoing transition of the Chinese economy, to lower commodity prices, to earlier exaggerations and domestic shortcomings in some countries, like insufficient structural reforms," he said.
The British Chancellor of Exchequer George Osborne underscored the shared interest of the international community in supporting China as it grapples to enhance the resilience of banks and corporates and ensure the sustainability of local government finances and credit.
"Structural measures such as state-owned enterprise and financial sector reforms and steps to reduce excess capacity will support China's economic transition," said the US Treasury Secretary Jacob Lew.
Signs of weaker-than-expected Chinese growth, volatility of the Chinese renminbi and persistent capital outflows has led to growing anxiety in the financial markets?despite plenty and strong buffers that emerging market and developing countries (EMDC) have accumulated in recent years, said Alexandre Tombini, Governor, Central Bank of Brazil.
The Turkish Deputy Prime Minister Mehmet Simsek noted that the spillovers and uncertainties emanating from the historic transition in the Chinese economy and the normalisation of the unconventional monetary policies in some advanced economies along with tumbling commodity prices pose important challenges for the global economy.
However, the Chinese leaders attending the annual Spring meeting of International Monetary Fund and the World Bank tried to assure the world leaders in almost every meetings they have had in the past few days and over the weekend that their economy continues to be strong and there is no cause of worry for them.