India’s central banker says China “not falling off the cliff”

 

India’s central banker came out strongly in support of China, saying the world’s second biggest economy was still contributing to global growth despite a slowdown as it adjusts its currency policy and shifts to consumer-led growth.

“My sense is there is underlying growth in China,” Raghuram Rajan told Bloomberg Television at the World Economic Forum in Davos, Switzerland.

“It’s not falling off a cliff,” Bloomberg reported him as saying. Chinese authorities should be taken at their word when they say aren’t deliberately depreciating the currency, he said.

Chinese stocks and the yuan have dropped hard since the beginning of the year as the economy slowed to its worst growth rate in a quarter of a century. The sell off has wiped away more than $6 trillion off stocks worldwide on cncerns abou the global economy, Bloomberg reported.

“The Chinese move to a basket is understandable because the dollar is strengthening, but the yen and the euro are weakening, so clearly some of the actions that have been taken to weaken currencies do have effects elsewhere,” Rajan said. “One shouldn’t see the Chinese move, to move towards a basket, as being unrelated to what’s happened elsewhere,” Bloomberg reported him as saying.

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