IMF's Lagarde Says China Economy Can Withstand Market Turmoil

By Ian Talley 

        WASHINGTON--The head of the International Monetary Fund on Wednesday backed Chinese efforts to stem recent market volatility and down played the signals that turbulence might be sending about the broader economy.
        Authorities in Beijing have scrambled to contain raging stock market sell-offs in recent weeks, interventions that have raised eyebrows overseas and raised questions about whether the government is committed to longer-term economic overhauls.
        But IMF Managing Director Christine Lagarde said no one should be surprised Beijing wants to prevent disorderly movements in markets. "That's, after all, the duty of such authorities," she said in an online press conference.
        "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 said.
        The IMF chief also said that China's economy is resilient and that the turbulence is partly a reflection of an immature market. "It's a relatively young market, and it's an element of a learning curve, both by the market players...and by the authorities as well."
        The managing director said the turmoil wouldn't derail Beijing's efforts to get the yuan included in the IMF's basket of reserve currencies, but hinted that it could take longer than the current review scheduled to wrap up in November.
        "We are very comforted by that determination to deliver on the reforms, which will be conducive, one day, when the time comes, once all the signals are checked positively, to the [yuan] being included," she said.
        Like the U.S., the IMF appears to be trying to use Beijing's reserve-currency bid as a way to spur more market liberalization.
        Write to Ian Talley at ian.talley@wsj.com
        (END) Dow Jones Newswires

        July 29, 2015 10:53 ET (14:53 GMT)

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