China’s central bank governor rules out weakening yuan to boost trade

China’s central bank chief promised on Friday to avoid weakening its yuan to boost sagging exports as he tried to reassure nervous financial markets about his government’s handling of its economy and currency at the start of a closely watched gathering of global finance officials.

Beijing wanted to use the gathering of finance ministers and central bankers from the Group of 20 rich and developing countries to promote its 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 the stock market and currency turmoil.

A key worry, despite repeated Chinese denials, is that Beijing will allow its yuan to decline in value to support struggling exporters. That expectation has driven an outflow of capital from China that spiked to a record $135 billion in December.

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

Zhou said the meeting of finance officials from the United States, Japan, Europe and other major economies should focus on managing lackluster global demand, structural economic reforms and promoting “sustainable and balanced” growth.

Other officials attending the meeting include the US Treasury Secretary Jacob Lew and the Federal Reserve Chairwoman Janet Yellen; China’s finance minister, Lou Jiwei and their counterparts from Germany, Britain, Japan, South Korea, India and South Africa.

Global growth has slowed to its lowest rate in two years and private sector forecasters say the danger of a worldwide recession is rising. The International Monetary Fund (IMF) has cut its forecast for this year’s global growth by 0.2% points last month to 3.4%. It said another downgrade is likely in its April update.

Japanese and Eurozone officials have called for coordinated global action but have yet to say what they might propose at the Shanghai meeting.

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.

On Friday, its main market index fell by an unusually large daily margin of 6.4%. Last year’s exports fell 2.8% from 2014, well below the official target of 6% growth in total trade.

The ruling Communist Party is in the midst of a marathon reform plan aimed at transforming China into a consumer-led economy and reducing reliance on trade and investment.

In separate comments at the G-20 opening ceremony, Xiaochuan tried to reassure his audience that the Chinese economy is healthy after the growth slowed to a 25-year low of 7.3% last year. He noted that it was still among the world’s strongest performances.