China central bank urges broader approach to global imbalances
As scrutiny of China's trade surplus intensifies, the country's central bank governor is calling for a wider framework to assess global imbalances. The remarks come as foreign governments press Beijing over the yuan and trade flows, adding to tensions around exchange-rate policy.
Highlights
- People's Bank of China Governor Pan Gongsheng urged G20 finance ministers to address global imbalances by considering both current accounts and financial flows.
- Pan emphasized that exchange-rate adjustments alone cannot resolve global imbalances and called for joint action between deficit and surplus countries.
- PBOC reiterated rejection of foreign criticism over China's exchange-rate policy as the trade surplus widens, framing imbalances as structural issues beyond currency movements.
PBOC sets out broader policy argument
As reported by Reuters, People's Bank of China Governor Pan Gongsheng told a G20 meeting of finance ministers and central bank governors in Bangkok on Thursday that global imbalances should be viewed through a more comprehensive analytical perspective, according to a central bank statement.Pan said policymakers should look not only at current accounts, which cover trade in goods and services, but also at money flows through financial channels. He added that global imbalances cannot be resolved through exchange-rate adjustments alone and said deficit and surplus countries should work together to achieve a dynamic equilibrium in the global economy.
Trade and currency tensions remain in focus
The comments add to Beijing's defence of its economic policy as China's trade surplus continues to widen. European leaders have stepped up calls for a stronger yuan as trade frictions with China remain under focus.Earlier this month, the PBOC rejected foreign criticism of its exchange-rate stance, saying it neither needs nor intends to gain a trade competitive advantage through currency depreciation. The latest remarks signal that Beijing continues to frame global imbalances as a broader structural issue rather than one that can be addressed mainly through currency moves.
In our earlier article on China’s third-quarter growth outlook and fresh policy support, we highlighted expectations of only a modest GDP pickup despite targeted rate cuts, mortgage subsidies, and added government debt quotas. We also noted that strong exports were offsetting weak domestic demand, pushing the trade surplus toward record levels and keeping trade tensions with key partners in focus.
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