Core Strategic Partners: The governor of China’s central bank has reaffirmed its pledge that it will not devalue its currency, the yuan/renminbi – in order to support its economy. Speaking at the G20 meeting of finance ministers and central bankers in Shanghai, Zhou Xiaochuan sought to reassure delegates that China’s economy remains on a sound footing.

The central bank also revealed that it has an abundance of policy tools at its disposal with which to ease the effects of the economy’s transition to one more dependent upon domestic consumption than exports.

The meeting comes a day after the country’s benchmark index, the Shanghai Composite, closed some 6.4% lower, signaling that the volatility that has hallmarked Chinese stocks since last summer may have further to run.

“Considering the scale of what the Chinese authorities are trying to accomplish, an economy that still grows at 6.5% isn’t a mean feat” said Will Masson, chief markets strategist at Core Strategic Partners.

“They’re trying to restructure, keep a balance between growth and open up their markets to cross-border trade and business while maintaining confidence that they’ve got things under control.”

The G20 meeting takes place amid calls for coordinated stimulus to boost a flagging global economy from the International Monetary Fund in a report released earlier in the week.

“Core Strategic Partners sees the timing of these reports and proclamations from central bankers as preparing the world for the unleashing of more monetary stimulus. This is almost certainly come in the form of quantitative easing and/or negative interest rates. One thing is certain, asset prices will be boosted and that’s good news for investors,” said Masson.

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