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Chinese premier: We alone cannot save world from Brexit downturn

International Monetary Fund?(IMF)?had predicted that uncertainty created by Britain's vote to leave the European Union would slow the world economy into next year. In photo: Chinese premier Li Keqiang. Photograph: (Getty)

AFP Beijing, China Jul 22, 2016, 11.37 AM (IST)
The world cannot depend on China alone to save it from a Brexit-induced downturn, the country's premier said today.

Li Keqiang made the remarks after meeting the heads of six global economic organisations, days after the International Monetary Fund (IMF) predicted that uncertainty created by Britain's vote to leave the European Union would slow the world economy into next year.

"Given the financial fluctuations as a result of Brexit, China will advance market-based reform of its exchange rate," Li said, adding, "we will not engage in a trade war or currency war. But it is impossible to carry all of the burden of the whole world on our shoulders," he said.

Improving global economic growth would require the world to step up macroeconomic coordination and increase the transparency of macro policies, Li added.

In an update to its April forecast, the IMF said global economic growth was likely to be 3.1 per cent this year and 3.4 per cent in 2017, a downward revision of 0.1 per cent for both years. At the same time it upgraded its growth forecast for China by 0.1 per cent to 6.6.

The Asian giant's economy expanded at 6.7 per cent in the April-June period, the same as the first three months of the year, and slowing from a growth of 6.9 for the full year 2015, its weakest annual rate in a quarter of a century. But the second-quarter reading was stronger than expected and fuelled hopes that growth in the world's second-largest economy may be stabilising.

Li said the IMF hike put "pressure" on China to "maintain growth and stability", adding that the organisation should "encourage all countries to move in the same direction".

Following Li's comments, World Bank president Jim Yong Kim praised China for its commitment to international economic cooperation at a "time when in the West there is a very loud rejection of globalisation and multilateralism".

The remarks come as Beijing finds itself in a dispute with the EU over whether or not it deserves to be granted market economy status, a designation that would make it much harder for major economies to fight Beijing over alleged unfair trading practices.

Li's meeting came ahead of a G-20 finance ministers summit in the Chinese city of Chengdu, where representatives from the biggest industrialised and emerging economies are expected to discuss the impact of Brexit.

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