In remarks at the G20 in Turkey, the People’s Bank of China quoted Mr Zhou as saying: “At present, the exchange rate of the renminbi against the dollar is stabilising, the correction in the stock market is already mostly over and the financial markets show hope for stabilising.”
Mr Zhou acknowledged that “before June, the Chinese stock market bubble grew continuously”, but added that of the three major corrections since June, only the most recent in mid-August had a global impact. Chinese government action had prevented further slides and systemic risks, he added.
“Following the correction, levels of leverage are clearly lower and there has been no notable effect on the real economy,” he added.
The PBoC issued its paraphrased transcript of Mr Zhou’s remarks only after Taro Aso, Japanese finance minister, told reporters that Mr Zhou had three times used the term “burst” referring to the stock market bubble. The Chinese transcript uses the more decorous term “correction”, and refers to a “bubble” only once.
Finance ministers and central bankers in the G20 on Saturday supported China’s argument that changes to its state-managed currency peg last month were a step towards a more market-determined exchange rate.
The sole dissenter was Mr Aso, who said the Chinese presentation was not detailed enough.
The meeting addressed worries of competitive devaluation amid a broader economic slowdown, particularly in emerging markets that are also contending with sharply lower prices for their commodity exports.
Recent data show that China-focused funds have been hit hard by the stock market turmoil, with international traders selling on soft Chinese economic data.
In addition to restrictions on selling stocks and the deployment of the “national team” of state-owned investment funds and institutions to buy up shares, part of the Chinese government’s strategy has been to criticise the media over its role in the stock market drops. Last week state-run television aired the confession from custody of a Chinese financial reporter detained for causing “panic and disorder”.
Additional reporting by Kana Inagaki in Tokyo
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