International Monetary Fund Managing Director Christine Lagarde said Wednesday that China could weather the turmoil battering its stock exchanges.
“We believe that the Chinese economy is resilient, and strong enough to withstand that kind of significant variation in the markets,” she said in an online press conference.
Lagarde noted that the Shanghai stock exchange, which fell 11 percent between Friday and Tuesday before rebounding modestly Wednesday, was still up 80 percent from a year ago. “It’s a market that has gone up extraordinarily,” she said. “It’s a relatively young market, and there is an element of a learning curve” among investors, companies and the authorities.
She said it should not be surprising to anyone that Chinese authorities had moved to restrain the steep daily falls in the capital markets. “The fact that they want to maintain a level of liquidity as well that is commensurate with an orderly process is also quite good.”
She pointed to “the very significant reforms” that Beijing is undertaking in the economy even as the authorities try to tamp down the turmoil in financial markets. The turmoil would not interrupt work toward eventually including China’s renminbi in the elite currencies that underpin the IMF’s special lending currency, the SDR.