(Bloomberg) - Group of 20 ministers smoothed tensions over China's August currency devaluation as the nation's central bank suggested the move will not be repeated any time soon.
"China is definitely trying to play a constructive role," Canadian Finance Minister Joe Oliver said in an interview. "It is the second largest economy in the world and so when it slows down it has global implications. That is what I think we are dealing with."
The deepening slowdown in the world's second-largest economy is dominating discussion among ministers and central bankers meeting on Friday (Sept 4) and Saturday (Sept 5) in Ankara.
With the MSCI emerging market index down 18 per cent so far this year, a draft communique prepared before the meeting cited "recent volatility in financial markets" and the need to monitor potential spillovers.
China tried to ease those concerns. Mr Yi Gang, deputy governor of the Chinese central bank, said Friday that his country's economy is solid despite the stock market selloff and the yuan will be stable.
"The Chinese economy's fundamentals are fine," Mr Yi said in an interview.
"No one can predict exactly on the market volatility, but I'm confident that the renminbi exchange rate will be more or less stable around the equilibrium level."
United States Treasury Secretary Jacob J. Lew told Chinese Finance Minister Lou Jiwei in Ankara on Friday that it's important for China to signal that it will allow market pressures to drive the yuan up as well as down.
China should avoid persistent exchange- rate misalignments and refrain from competitive devaluation, Mr Lew said, according to a Treasury statement.
The draft statement seen by Bloomberg News said that in line with the improving outlook, "monetary policy tightening is more likely in some advanced economies, which may remain one of the main sources of uncertainty in financial markets".
Some delegates from emerging markets said at the meeting that the Fed should raise interest rates to end uncertainty, said an official at the talks, who requested not to be named because the discussions were private.
Policymakers will discuss the problems in China without directly referencing them in the final statement, according to a member of the Russian delegation who spoke on condition of anonymity.
The Chinese asked for their problems not to be mentioned directly, a euro-area official said.
China's surprise decision to revalue the yuan caused the currency to drop the most in 21 years last month, triggering exchange-rate declines elsewhere in the emerging world on concern a weaker yuan will hurt countries exporting to China.
Once the darlings of the world economy as they helped lift it from its 2009 recession, emerging markets from China to Brazil have now slid amid declining trade, mounting debt, falling commodity prices and a rising US dollar. The sell-off in equity markets is already prompting parallels to be drawn with the Asian financial crisis of the 1990s.
The Chinese authorities "don't have all the answers", Mr Angel Gurria, secretary-general of the Organisation for Economic Cooperation and Development, said in an interview with Bloomberg Television.
He said China is very aware that what happens in its country has a "significant impact for the rest of the world".
China's slowdown comes as the Federal Reserve is considering raising interest rates in the United States for the first time in nine years. Vice-chairman Stanley Fischer represented the Fed at the talks.
The odds of an increase in September have fallen to 30 per cent as of Friday from 40 per cent at the end of July, according to futures data compiled by Bloomberg. The probability of an increase at or before the October meeting is 43 per cent, and 59 per cent for December.