China’s Zhu Says Divergent Global Monetary Policies Create Risks

China is concerned about the risks from a “divergence” in monetary policies among developed economies, including the U.S, Europe and Japan, Vice Finance Minister Zhu Guangyao said.

“It will create new risks and uncertainties for the global economy,” Zhu said in an interview today on board a plane headed for Brisbane, Australia, where Group of 20 leaders meet this weekend. “China is concerned about the spillover effects. We want to see a stable international monetary environment.”

A number of gobal central bankers meeting in Paris last week said financial markets could suffer a bout of turbulence when interest rates are eventually raised. The global economy is “uneven and brittle” and the main threats are geopolitical risks and a possible abrupt correction in financial markets, the International Monetary Fund said in a staff report yesterday ahead of the G-20 summit.

Zhu, who is a negotiator on financial affairs within the G-20 framework, said a “key economic topic” on the agenda will be coordination of macroeconomic policies, especially monetary policy. “All the members have to show the willingness and commitment to better inform each other,” he said.

The economic situation in Europe is particularly “worrying”, he said, with little sign of structural reform and growing evidence of deflation.

Zhu said China “is on a solid track of sustainable growth” and would remain “a key contributor” to the global economy.

— With assistance by Xin Zhou

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