On October 15, the Group of Twenty (G20) held its third Finance Ministers and Central Bank Governors’ Meeting of the year in Bangkok, Thailand. Participants discussed global macroeconomic conditions, financial sector development, progress and outlook for cooperation under the G20 finance track, among other topics. Lan Fo’an, Minister of Finance, and Pan Gongsheng, Governor of the People’s Bank of China (PBC), attended the meeting and delivered remarks. Liao Min, Vice Minister of Finance, and Xuan Changneng, Deputy Governor of the PBC, also took part in the meeting.

Lan Fo’an, Minister of Finance: Implement a more proactive fiscal policy in a targeted and effective manner

Lan Fo’an noted that global economic growth is confronted with multiple challenges. The top priority is to properly address geopolitical conflicts, rising protectionism and deepening fragmentation to foster a sound environment for global growth. The G20 should boost certainty through macroeconomic policy coordination, foster new growth drivers via structural reforms, and expand the global economic and trade pie through open cooperation. It should make positive contributions to strong, balanced, sustainable and inclusive growth of the world economy, and continue to play a leading role in improving global governance and tackling global challenges. Discussions within the G20 on major international economic and financial issues should follow the principles of comprehensiveness, objectivity and balance. China calls on all parties to uphold the spirit of consensus-building, fully respect and accommodate each other’s legitimate concerns, jointly support the G20 Presidency in delivering a successful G20 Leaders’ Summit, and strive for balanced and pragmatic outcomes.

Lan Fo’an added that this year marks the start of China’s 15th Five-Year Plan period. The Chinese economy has maintained an overall stable momentum and is shifting toward new, higher-quality development. We will implement a more proactive fiscal policy in a targeted and effective way, promote sustained, high-quality and sound economic development, and inject confidence and certainty into the world economy.

Pan Gongsheng, Governor of the People’s Bank of China: Continue to implement a moderately accommodative monetary policy

Pan Gongsheng stated that escalating geopolitical conflicts remain the biggest source of uncertainty for the global economy. Sharp volatility in government bond markets in some countries and valuation corrections in AI-related assets have heightened financial vulnerabilities. Modernizing financial regulation does not mean deregulation, nor should it undermine the stability and risk resilience of the financial system. All parties should fully leverage the G20 finance cooperation platform, strengthen coordination of macroeconomic policies, and jointly respond to global risks and challenges. On global imbalances, all parties need a more comprehensive analytical perspective. We should not only look at current accounts but also financial channels. In particular, with deepening global financial integration, greater attention should be paid to the impact of financial factors such as capital flows on imbalances.

“Global imbalances cannot be resolved through exchange rate adjustments. Exchange rates are affected by a host of factors including economic growth, monetary policies, financial markets, geopolitics and sudden risk events. There is no simple linear relationship between exchange rates and current accounts. Deficit and surplus countries need to work together to achieve dynamic balance of the global economy,” said Pan Gongsheng.

Pan Gongsheng remarked that China’s high-quality economic development continues to register positive momentum, its financial markets operate steadily, and the fundamentals and supporting conditions sustaining long-term sound economic growth remain unchanged. The People’s Bank of China will continue to implement a moderately accommodative monetary policy to create a sound monetary and financial environment for stable economic growth and smooth functioning of financial markets in China.

Source: Shanghai Securities News