At the meeting of G20 Finance Ministers and Central Bank Governors which concluded on February 23, China and the US engaged in a vigorous debate on China's economic reforms. Before the meeting, American Treasury Secretary Jacob Lew had criticized China for its failure to show any signs of accelerating economic reform in line with U.S. expectations, and called for China to speed up reforms though facing the risk of social and political turmoil. Chinese Finance Minister Lou Jiwei responded in kind by pointing out that the US had not engaged in any structural reform either, but had revitalized its economy by printing money.

Lew wrote to G20 members voicing his concerns about bad debt in the Chinese financial system, which may threaten the global economy. Lou Jiwei responded that China's shadow banking problem was less serious than western economies, since China's shadow banking was still connected with the real economy; while the shadow banking products of western economies, such as CDS (credit default swap), have nothing to do with real economic activity.

Zhou Xiaochuan, governor of the People's Bank of China, emphasized at the meeting that the Chinese government is carefully monitoring the level of risk in existing economic operations. For the time being the scale of China's shadow banking is still small, but it is developing fast and the relevant authorities are watchful. Zhou pointed out that a 7 percent to 8 percent GDP growth is well adapted to China's needs, and also helps global economic growth.

According to Lou Jiwei, China is currently focused on lowering the inflation rate and promoting employment, so as to improve the quality of GDP growth. The international community expects China to continue in its role as the global economic engine and contribute over 50 percent to global economic growth as in 2009 and 2010, but such levels of growth are unsustainable. Problems like environmental pollution and excess production capacity would be the inevitable results. China presently contributes almost 30 percent of global economic growth, while its economy represents less than 10 percent of the global economy. It is unreasonable to ask China to contribute half of global economic growth.

The article is edited and translated from《中国财长驳美财长“中国改革慢”：你们靠印钞复苏》, source:Xinhua international.