Shanghai, February 26

Officials at a global finance meeting today urged governments to speed up promised job-creating reforms instead of relying on stimulus to perk up slackening growth.

The clouded global outlook has upped pressure for reassurances and action from the finance ministers and central bankers gathered in Shanghai for a meeting of the Group of 20 (G20) major rich and emerging economies. But the leaders have sought to squelch expectations the meeting will produce specific growth plans.

Christine Lagarde, the managing director of the International Monetary Fund (IMF), said governments should act faster on reforms promised at a G-20 meeting in 2014. That list included some 800 commitments meant to simplify regulations and boost trade, investment and technology development, but many have yet to be carried out.

“Policymakers do not need to invent yet another trick, but they need to deliver steadily on the commitments they have made,” Lagarde said at an event organised by Washington-based Institute of International Finance (IIF) alongside Shanghai meeting.

Referring to monetary and fiscal policy and structural reforms, Lagarde said, “There has to be action on all fronts.”

Others at meeting are US Treasury Secretary Jacob Lew and Federal Reserve Chairwoman Janet Yellen; China’s Finance Minister, Lou Jiwei, and central bank Governor, Zhou Xiaochuan; Mario Draghi of European Central Bank and their counterparts from Europe, South Korea, India and South Africa.

Global growth is at its lowest in two years and forecasters say the danger of recession is rising. The IMF cut this year’s global growth forecast by 0.2 percentage point last month to 3.4 per cent. It said another downgrade is likely in April.

Central banks still have room to use interest rate cuts and other stimulus but need governments to follow through with promised economic changes, said Mark Carney, head of Bank of England. “Global growth has disappointed because innovation and ambition of global monetary policy has not been matched by structural measures,” Carney said at the IIF event.

“In most advanced economies, difficult structural reforms have been deferred.”

Germany’s Finance Minister, Wolfgang Schauble, said fiscal stimulus has ‘reached its limit’ and his government will not agree to more coordinated spending in the event of further deterioration in the global economy. He urged other countries to deliver on reforms instead.

“We are not lacking in policy proposals,” he said. “We are lacking in policy implementation.”

Lew said Washington wants G-20 governments to reaffirm pledges to avoid weakening their currencies to boost exports.

“It doesn’t lead anywhere good,” he told reporters. “I hope we can get a commitment to avoid that.”

A key concern in global financial markets, despite repeated Chinese denials, is that Beijing might weaken its yuan to support struggling exporters. That expectation has driven an outflow of capital from China that spiked to a record $135 billion in December.

Following complaints China fuelled volatility in global markets by failing to explain policy changes. Lew appealed for clarity from Beijing. “The exchange rate policy is one in particular that needs to be clearly communicated,” he said.

The Chinese hosts hoped to use the meeting to promote their campaign for a bigger voice in managing global trade and finance. Instead, the communist government is scrambling to defend its reputation for economic competence following stock market and currency turmoil.

Earlier today, China’s central bank chief promised to avoid weakening the yuan as he tried to reassure nervous financial markets about his government’s handling of its economy and currency.

“We will not resort to competitive depreciation to boost our advantage in exports,” said Zhou Xiaochuan, governor of the People’s Bank of China, at a news conference.

The foreign view of China’s economic health was shaken last year by a stock market collapse that wiped out $5 trillion in paper wealth.