Global finance chiefs have persuaded China to join a foreign-exchange peace pact after the country’s surprise August devaluations raised fears of a currency war.
China and other members of the Group of 20 nations on Saturday agreed to “refrain from competitive devaluations, and resist all forms of protectionism,” according to the final communique from a two-day G20 meeting in Ankara, Turkey.
The world’s second-largest economy was a focus of the meeting because of its recent stock market crash, which had sparked a round of panic selling by investors around the world.
The Chinese delegation said the currency devaluation was not an attempt to take exports from their international competitors and the explanation was accepted by the other delegates, an international official told Bloomberg News.
China’s central bank allowed the yuan to drop after the Shanghai index lost around 40 per cent from a peak in mid-June.
The bank said government intervention has prevented a market free-fall and the impact on the real economy is limited.
It also said there was no basis for long-term yuan depreciation.
Analysts say China is struggling to meet its growth target for 2015 of about 7 per cent – a figure that is itself a marked slowdown from GDP growth levels of recent years – amid sluggish investment growth and falling exports.
The country’s GDP grew 7.4 per cent in 2014, the weakest annual expansion in 24 years.
China’s economic slowdown comes as the US Federal Reserve is considering raising interest rates for the first time in nine years.