SHANGHAI China sought to restore confidence in its economy as financial leaders from G20 nations gathered in Shanghai on Friday, but Germany all but ruled out any coordinated stimulus to counter a deepening global chill.
While the health of the world's second-largest economy, which hosts the G20 presidency this year, is a key talking point around the two-day summit, the threat of the UK leaving the European Union and its political and economic implications have also surfaced as concerns among participants in the meeting.
Finance ministers and central bankers have called for better policy coordination to counter a sputtering global economy and volatile financial markets, but disagreed about what steps to take, making it unlikely that concrete action points will emerge from the meeting.
"Talking about further stimulus just distracts from the real tasks at hand," Germany's Minister of Finance Wolfgang Schaeuble said on Friday, rebuffing a recommendation from the International Monetary Fund (IMF) that the G20 should start planning now for a coordinated stimulus programme.
"We, therefore, do not agree on a G20 fiscal stimulus package as some argue, in case outlook risks materialise.
China's central bank governor repeated assurances the country would not stage another devaluation of its currency, the yuan CNY=CFXS, to support the economy. He also sought to manage expectations around the speed of China's economic reform agenda.
"China will strike a balance between growth, restructuring and risk management," People's Bank of China (PBOC) Governor Zhou Xiaochuan said at a conference held by the Institute of International Finance (IIF) in conjunction with the G20 meeting.
"While the reform direction is clear...the pace will vary, but the reform will be set to continue and the direction is not changed."
Overhanging the summit are global concerns about China's ability to manage its domestic markets, currency and commitment to wider restructuring reforms. Concerns about its slowing economy and confusion over its currency policy were among the factors which sowed turmoil in global markets in January.
U.S. Treasury Secretary Jack Lew said on Friday he believed China had the tools to accomplish its economic transition, but that it needed to stick to its reform agenda and communicate policies, especially those on its exchange rate, clearly
"(There's a) need to avoid competitive devaluation, that's competing in a beggar-thy-neighbour way for sharing a pie that's either frozen or shrinking and it doesn't lead anywhere good," he told reporters.
For his part, Zhou said China had monetary policy wiggle room, a statement echoed on the fiscal side by the Chinese finance ministry.
Other G20 leaders have been quick to talk down the case for further policy stimulus amid rising debt levels and already extremely low interest rates.
Bank of England Governor Mark Carney warned cutting rates below zero carried serious risks, and blamed the recent global slump in shares and other assets on the failure of governments to make bold economics reforms.
Schaeuble said "the debt-financed growth model has reached its limits (and) is even causing new problems, raising debt, causing bubbles and excessive risk taking, zombifying the economy."
And Japan's Finance Minister Taro Aso shrugged off calls on Friday from some quarters for Tokyo to roll out fresh fiscal stimulus. Japan's central bank stunned investors by adopting negative interest rates last month.
Geopolitics is also a worry for European representatives.
Speaking in Hong Kong, French Finance Minister Michel Sapin said it was best for the UK to remain in the European Union, and expects the British people would make the "right decision" at a June 23 referendum to remain a bloc member.
His comments follow a Financial Times report that British finance minister George Osborne is pushing the G20 to warn against the dangers of a "Brexit".
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Policymakers are watching closely for signs that China is ready to tackle the imbalances they see standing in the way of its economic sustainability.
Zhou said the latest economic data shows positive signs for China's growth in 2016 and that interest rates would play a more important policy role in dealing with downside risks.
"The signal from interest rates will be clearer...so we are gradually developing an interest rate corridor," he said.
"We are relying more on a median value of interest rates generated by the central bank's open market operations."
Few in the G20, however, are underestimating China's economic challenges.
International Monetary Fund (IMF) chief Christine Lagarde said China faced an "overwhelming" agenda of structural reforms as its leaders open up financial markets and move the economy away from debt-fuelled investment.
Zhou said he was not worried about China's external payment situations despite recent falls in its foreign exchange reserves, and that fluctuations in the reserves are normal. He added that China's fiscal policy would be more proactive.
Beyond China, Schaeuble stressed it was necessary for global economies to continue with financial regulation, implement structural reforms, and to make markets less volatile.
A report published by the IMF on Wednesday called for a coordinated stimulus programme to keep the slowing global economy from stalling.
The Organisation for Economic Cooperation and Development issued a report on Friday calling on the world's 20 biggest economies to step up the slowing pace of reforms to boost growth amid sluggish trade and weak investment.
(Additional reporting by Jan Strupczewski, Samuel Shen, Adam Jourdan, Engen Tham and Nate Taplin; Writing by Jason Subler and John Ruwitch; Editing by Sam Holmes and Kim Coghill)