Financial Street Forum 2024: Driving reform and global openness

Editor's note: Matteo Giovannini, a special commentator on current affairs for CGTN, is a finance professional at the Industrial and Commercial Bank of China and a non-resident associate fellow at the Center for China and Globalization. The article reflects the author's views and not necessarily those of CGTN.

The Financial Street Forum 2024, scheduled to take place from October 18 to 20 in Beijing, stands as one of the most significant financial events of the year, not only for China but for the global economy. It reflects the country's increasing efforts to position itself as a stabilizing force in global finance while advancing its domestic economic reforms.

Through a wide-ranging agenda, the forum highlights the country's pivotal role in shaping the future of international financial governance. It underscores the importance of its economic and financial reforms in ensuring sustainable growth both within its borders and across the globe.

One of the key thematic sessions of the gathering will explore the enhancement of China's modern central banking system. As the world's second-largest economy, China's central banking policies directly influence global financial markets. In the face of evolving challenges such as inflation, fluctuating commodity prices, and a volatile global economy, China's central bank, the People's Bank of China, is working to modernize its systems and enhance its monetary policy tools to ensure both domestic and international financial stability.

The modernization of China's central banking system is crucial for two main reasons. First, it will allow for more sophisticated policy instruments that can better manage the country's debt levels, liquidity, and inflationary pressures. As China continues its transition from a manufacturing-driven economy to a more consumption-based model, having a modern and adaptive central banking system is vital for maintaining macroeconomic stability. Second, as China opens its financial markets further to foreign investors, the central bank must be equipped to manage increased capital flows, which can lead to greater volatility if not properly handled.

The discussions at the forum on this issue are timely. The world is still recovering from the economic shocks caused by the COVID-19 pandemic, and the lessons learned from recent global economic turbulence will undoubtedly inform China's approach to financial reform. A strong central banking system will enable China to continue playing a crucial role in promoting global economic stability.

Capital market reforms are another focal point of the gathering, and they are integral to China's economic transformation. China's financial markets have grown tremendously over the past few decades, but there are still areas that need improvement. This is not only about improving market mechanisms but also about fostering innovation and encouraging the flow of long-term investment into sectors that are critical for China's future development.

By deepening capital market reforms, China can encourage more domestic and foreign investment in emerging industries, particularly in sectors such as technology, green energy, and advanced manufacturing. These industries are key to China's goal of transitioning to high-quality and innovation-driven growth. Moreover, more transparent and efficient capital markets will also bolster investor confidence, attract foreign capital, and reduce systemic risks that could destabilize the economy.

Given the increasing interconnectedness of global financial markets, reforms in China's capital markets also have global implications, providing opportunities for international investors and encouraging more balanced and sustainable global economic growth. The discussions at the forum can serve as a platform for exploring how China can enhance its capital markets while aligning with global standards and regulations, fostering greater financial cooperation.

China's economic shift toward high-quality development is a central theme at this year's forum. With a focus on driving industrial growth through financial support, this aspect of the forum underscores China's commitment to leveraging its financial system to boost sectors that are crucial for its long-term competitiveness, such as green technologies, digital transformation, and advanced manufacturing.

Financial support for industries that align with China's strategic priorities is essential for the country's continued development. For instance, as China seeks to achieve its carbon neutrality goals by 2060, there is a significant need for investment in clean energy technologies, green infrastructure, and energy-efficient industrial processes. Similarly, China's aim to transform the country into a global leader in high-tech manufacturing requires substantial financial backing for research and development, innovation, and digital transformation.

The discussions at the forum on this topic will likely emphasize the importance of policy coordination between the government, financial institutions, and industry stakeholders to ensure that financial resources are directed toward the sectors that will drive China's future growth. In doing so, China can create a more sustainable and resilient economy, capable of weathering both domestic and global challenges.

In today's interconnected world, financial openness and economic stability cannot be achieved in isolation. This is why fostering mutually beneficial international trade and investment cooperation is a critical topic of the forum. As China continues to expand its Belt and Road Initiative and strengthen its trade relationships with countries worldwide, financial cooperation is becoming increasingly important.

The country's leadership understands that promoting international trade and investment cooperation benefits not only its own economy but also contributes to global economic stability. The forum provides an opportunity for China to engage with global financial leaders and policymakers, discuss shared challenges, and identify areas for cooperation that can lead to mutually beneficial outcomes.

By addressing key issues such as modernizing the central banking system, deepening capital market reforms, empowering high-quality industrial development, and fostering international cooperation, the forum plays a critical role in shaping the future of China's economy. In doing so, it helps to ensure that China remains a key driver of global growth while also contributing to the stability and resilience of the global financial system.

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