Zhou says markets have stabilised as G20 meetings end

China's markets have largely finished correcting, said People's Bank of China (PBoC) governor Zhou Xiaochuan on September 6, as the G20 meeting of central bank governors and finance ministers drew to a close.

Zhou said the renminbi exchange rate has stabilised and a correction in stock markets has largely reached its conclusion. The renminbi fell after the PBoC moved to a more "market-orientated" exchange rate in August, and it has been 2.5% against the dollar since the start of the year.

Stock markets in China have seen much more dramatic moves and Zhou acknowledged a bubble had burst. The Shanghai Stock Exchange Composite Index has fallen by 40% from a peak in June and is down 3.39% for the year to date.

Zhou said the stock market moves had inflicted relatively little damage on the real economy, and stressed the authorities' determination to continue with market reforms remained as strong as ever.

The latest meeting of the G20 finance ministers and central bank governors ended over the weekend. The communiqué, published as the meeting closed, contained many common strands with the other G20 meetings in Turkey this year – the need for structural reform, sustainable debt and the swift ratification of International Monetary Fund quota reforms by the US, to name a few, but some new themes emerged as well.

Refrain from competitive devaluations

A new line stresses the countries will "refrain from competitive devaluations" – a charge levelled at some central banks pursuing easy monetary policies, and most recently at China in the aftermath of the renminbi devaluation, denied by Chinese officials.

The communiqué also more clearly emphasises the need to "carefully calibrate and clearly communicate" actions, "especially against the backdrop of major monetary and other policy decisions", to minimise spillover effects.

Attention is focusing on the Federal Reserve, which could raise interest rates on September 17, with the probability of global spillover effects.

In an effort to create more concrete results from the G20 meetings, the group established what it calls a "robust framework" for monitoring progress towards previously agreed growth strategy commitments. The first accountability report is due to be presented at the G20 summit in Antalya on November 15–16.