Minister: US 'key' to global recovery

A global economic recovery rests mainly on the United States' shoulders, Finance Minister Lou Jiwei said on Wednesday.

"A global recovery requires joint efforts from many countries, but the key lies with the US," Lou told reporters on the first day of the annual China-US Strategic and Economic Dialogue in Beijing. "China is experiencing a transition from a high-growth model to a medium-high-growth model. We are now focusing more on the 'new norm' of structural reform.

"So the scenario is unlikely to recur in which China contributes to half of the world's growth in the aftermath of the 2008 financial crisis."

The Chinese government has repeatedly said it would not roll out an intensive stimulus program after the nation's gross domestic product growth in the first quarter dipped to 7.4 percent, an 18-month low. It is the first time a top Chinese official has explicitly said that the global economy should not count on China for it to recover.

US GDP in the first quarter declined 2.9 percent from the previous year due to the extreme weather of the past winter. But hope is rising that the world's largest economy may rebound strongly in the second quarter, given robust new job data in recent months.

In response to the likely second-quarter recovery, the US Federal Reserve said it would reduce monthly bond purchases to $45 billion, and announced it will further cut it to $35 billion starting from July.

But this has stirred fears that the tapering will trigger a massive capital outflow in emerging markets.

Lou said both China and the US recognize that the tapering of the previous monetary policy is beneficial and will not bring global imbalance.

"But we should pay attention to the orderly tapering. The consequence might reflect the cross-border flow of speculative capital in developing countries and might add difficulties to our management of the foreign exchange," Lou said.

"The US has continued to demand less Chinese government interference in the yuan's value, but it is difficult for us to do that under the current situation in which the economy has not yet recovered and cross-border capital flow is not normal," he said.

Lou also said China's economy was stable, and structural reforms were showing results. He said China has made progress in its economic rebalancing and that he hoped the US could deliver on its economic measures.