SHANGHAI: China’s central bank chief pledged to further open up the country’s vast financial markets, saying in a speech that yuan assets can meet global investors’ growing need for diversification amid trade uncertainty.
Bank Governor Pan Gongsheng cited rising geopolitical risks, profound changes in the global economic landscape and rapid advances in AI as reasons for China to continue promoting yuan internationalization.
“China’s steady economic growth, and rapid development of high-tech industries provide solid support for RMB assets,” a People’s Bank of China (PBOC) statement quoted Pan as saying in a Thursday speech given on the sidelines of the annual meetings of the International Monetary Fund (IMF) and World Bank.
The remarks came a day after IMF managing director Kristalina Georgieva said China must pivot from export-led growth towards more domestic consumption.
In Pan’s speech, given to international policymakers at the annual meeting, he also called for Beijing to “shift from exports more towards domestic consumption,” according to the statement.
China has stepped up efforts to open its capital markets, at a time when US President Donald Trump’s trade war and unpredictable foreign policies have dented trust in dollar assets.
Global financial markets have also become more turbulent as investors increasingly worry about whether companies embarking on massive investment in AI will manage to make sufficient earnings gains amid higher borrowing costs.
Pan said the PBOC will promote broader global acceptance and use of yuan bonds as eligible collateral, strengthen cross-border financial infrastructure connectivity and support the development of offshore yuan markets.
The bank will continue to expand risk management tools to expedite investment and financing, according to the statement.
In a separate speech yesterday, the central bank chief said global economic imbalances “are closely linked to the evolution of the global division of labour, inherent contradictions in the international monetary system, and factors such as chronic high fiscal deficits and high consumption in some countries,” according to a separate PBOC statement.
“Global imbalances cannot be corrected through exchange rate adjustments,” Pan said at yesterday’s meeting with European Central Bank president Christine Lagarde and Valdis Dombrovskis, the European commissioner for Economy and Productivity, the statement said. – Reuters