Chinese central bank Deputy Governor Yi Gang said he is “pretty confident” that the country’s gross domestic product will grow 6.5 percent to 7 percent this year if the U.S. economy expands by 2 percent.

A number of first-quarter indicators have shown China’s economy is “pretty robust,” Yi said Thursday at a Brookings Institution event in Washington, citing electricity, transportation, inflation and producer-price data.

“If the world’s two largest economies’ economic picture is pretty much within the expectation, we have a solid foundation to fight the weak demand of the global economy,” Yi said in English.

Yi’s comments came just hours before China releases a string of economic data including first-quarter GDP on Friday in Beijing. The world’s second-largest economy is expected to show an expansion of 6.7 percent from a year earlier, the median estimate in a Bloomberg survey of economists. Premier Li Keqiang said last week the improving trend in the economy is not solid, impacted by a sluggish global economy and market volatility.

While the official CFETS RMB Index, which tracks the Chinese currency against 13 others, is trading at the lowest level since it began in late 2015, Yi defended the country’s foreign-exchange policy and said the rate is based on market supply and demand.

“The yuan is in more or less equilibrium range,” Yi said. “The market force is still the No. 1 factor, but at this stage tremendous volatility or overshooting isn’t good for China or the rest of the world, especially when global demand is weak.”

The nation’s foreign-exchange reserves, the world’s largest currency hoard, unexpectedly increased by $10.3 billion to $3.21 trillion last month, the People’s Bank of China said in a statement last week. That was the first gain since October and compared with a $6.3 billion decrease expected by economists surveyed by Bloomberg.

China’s transition from an investment to consumer-driven economy will take “several years,” and China’s high saving rate presents difficulty, Yi said.

Source:
courtesy of BLOOMBERG

by Bonnie Cao

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