China’s premier, Li Keqiang, has taken aim at the United States in calling for free trade policies to be maintained to bolster the “difficult recovery” in the world economy.
Following a meeting in Beijing involving the heads of the International Monetary Fund (IMF) and World Bank, premier Li also said growth should be supported by structural reforms rather than stimulus such as quantitative easing.
China has moved to make its economy less dependent on exports since it was roundly criticised for heavily devaluing its currency, the yuan, two years ago in a bid to bring down borrowing costs and boost the competitiveness of its goods.
Economic growth was measured at an annual rate of 6.9% for the first half of this year – better than expected – as the world’s second-largest economy tries to get to grips with risks from its reliance on debt.
Premier Li reiterated China’s pledge not to resort to competitive currency devaluation again to help solve its imbalances but said responsibility for maintaining the path to growth lay clearly with governments.
His comments on free trade were seen as a clear dig at US President Donald Trump, who argues the US gets a raw deal on the world stage.
Premier Li said: “There are increased positive factors in the global economy and signs of warming-up in some aspects.
“But at the same time, the fragility persists and unstable and uncertain factors are still increasing.
“Free trade is a good medicine for resolving problems. Through free trade, we can resolve many problems in the difficult recovery, help companies transform and give consumers more choices.”
His comments were supported by IMF chief Christine Lagarde, who said that while the global economy was generally recovering, it could easily be derailed by policy uncertainty and the threat of protectionism.
The yuan, which has regained much of the strength lost last year, fell back for the first time in two weeks on Tuesday.
That was after the country’s central bank relaxed capital controls, sparking speculation the government wants to halt the currency’s recent strengthening despite its pledge not to intervene.