China’s central bank governor called for a collaborative approach to addressing global economic imbalances, emphasizing that adjustments to exchange rates alone are insufficient. Speaking at the third G20 finance ministers and central bank governors’ meeting in Bangkok on Thursday, Pan Gongsheng, governor of the People’s Bank of China (PBOC), urged both surplus and deficit economies to share responsibility for achieving a dynamic balance in the global economy.
Pan highlighted the need to adopt a broader analytical framework that goes beyond the current account, stressing the importance of financial channels and capital flows in shaping economic imbalances amid deepening global financial integration. He pointed out that exchange rates are influenced by a wide range of factors—including economic growth, monetary policy, financial markets, geopolitical developments, and unexpected events—and do not have a straightforward linear relationship with current-account balances.
His remarks followed the recent release of a PBOC position paper on the yuan’s exchange rate, which asserted that China has not engaged in deliberate currency devaluation to gain export advantages. China’s managed floating exchange-rate system has been criticized by the United States and the European Union for allegedly keeping the yuan artificially weak, charges Beijing has repeatedly denied.
Pan also warned of heightened financial risks, citing sharp fluctuations in some sovereign bond markets and increasing vulnerability linked to potential corrections in artificial intelligence-related asset valuations. He identified escalating geopolitical conflicts as the primary source of uncertainty for the global economic outlook. Additionally, Pan stressed that efforts to modernize financial regulation should not be conflated with deregulation nor should they compromise financial stability and resilience.
At the same meeting, China’s Finance Minister Lan Fan underscored the urgency of addressing geopolitical tensions, rising protectionism, and growing economic fragmentation to foster a supportive environment for global growth. Lan called on the G20 to maintain discussions that are comprehensive, objective, and balanced. He further announced China’s commitment to pursuing more proactive fiscal policies aimed at sustaining growth and boosting confidence in the global economy.
On the sidelines of the International Monetary Fund and World Bank annual meetings, Pan reaffirmed China’s intent to support global investors and issuers seeking access to its financial markets, including expanding the international use of yuan-denominated bonds. This initiative forms part of China’s broader strategy to enhance the international stature of its currency.
During a briefing, Erin Browne, U.S. Treasury undersecretary for international affairs, highlighted the focus of Washington’s G20 presidency on the role of “non-market policies and practices,” particularly those attributed to China and other nations, in contributing to global imbalances. Browne criticized these practices for distorting trade and capital flows, undermining fair competition, and generating adverse spillovers worldwide. She called on the IMF to take a more proactive role in identifying such distortions and addressing policies that encourage harmful competitive behaviors among countries.