Finance Minister Nene says more economic transparency from Beijing would help emerging-market nations respond to slowing growth
LIMA, Peru—South African Finance Minister Nhlanhla Nene said China needs to provide greater clarity about the health of its economy to help officials in other emerging markets respond better to their slowing economies.
The International Monetary Fund and economic leaders around the world have urged China to improve transparency and implement measures to open up its markets. Uncertainty about the country’s course triggered sharp volatility across global markets in recent months.
“In China, unless we know what is happening, we are not able to plan ahead,” Mr. Nene said in an interview in Lima, where the IMF and World Bank are holding their annual meeting. “In the U.S., the reason why the tensions have lowered is because there has been constant communication.”
At the height of the commodities boom, South Africa joined Brazil, Russia, India and China as a member of the so-called Brics club of fast-growing emerging markets, which represented growing clout in the global economy.
But like other emerging markets, South Africa’s economic growth has slowed along with weakening Chinese demand for its raw materials.
The IMF says South Africa’s economy will likely expand 1.4% this year and 1.3% in 2016, slower than expected just months ago and down from about 5.4% growth in 2007. South Africa is a major supplier of iron ore and other resources to China.
“China has been one of the largest consumers of our materials,” Mr. Nene said. “That has fallen and that has an impact.”
Mr. Nene said there would be more clarity about China’s economy if its central bank loosens controls on the yuan, which is also known as the renminbi.
“They are moving in the direction of a floating currency,” Mr. Nene said, adding that this would put South Africa in a better position “to be able to understand what it will mean in terms of our situation.”
Mr. Nene said China’s weaker demand for resources means that South Africa needs to focus on new markets and adding value to its raw materials before exporting them abroad.
“We are changing the approach to our exports,” he said. “We actually need to put in more in adding value to our commodities.”
He added that volatility in capital flows in and out of emerging markets isn’t as much of a concern as it once was for policy makers in South Africa.
It’s “the new normal,” Mr. Nene said. “We’ve got used to it because it has been like this now for a considerable period of time.”
Mr. Nene said South Africa and other Brics countries need to work together in order to revive economic growth.
“A coordinated approach to our challenges seems to be the best way out,” he said. “There is hope. It is going to take a bit of time and it is not going to be now that we are out of the woods.”
By RYAN DUBE