PBOC: Need reforms, not exchange rates, to address global imbalances

The People's Bank of China (PBOC), China's central bank, issued a detailed statement on October 8 setting out its position on the RMB exchange rate. This came amid heightened interest in the renminbi's exchange rate in light of widening global economic imbalances. An April policy paper by the International Monetary Fund (IMF) noted that the decade-long trend of declining imbalances had reversed.

Asserting its stance, the PBOC said China has no need or intention of gainning a trade advantage through currency devaluation and has never resorted to competitive devaluation. China operates a managed floating exchange rate regime based on market supply and demand, with reference to a basket of currencies, the statement said. Market forces play a decisive role in determining the RMB exchange rate.

Remarks by Chinese financial officials in the days that followed returned to a broader point: exchange-rate adjustments alone cannot resolve the structural causes of global imbalances.

At the 54th meeting of the International Monetary and Financial Committee, held in Bangkok from October 16 to 17, PBOC Governor Pan Gongsheng discussed the global economic outlook and the role of the IMF.  

The meeting noted that the global economy had performed better than expected despite geopolitical shocks, while rising trade tensions had added uncertainty, and rapid advances in artificial intelligence had increased the risk of divergence. Downside risks remained, participants said, underscoring the need to safeguard macroeconomic and financial stability and address common challenges through international cooperation.

Pan said the IMF, as the leading multilateral financial institution, should clearly oppose protectionism, uphold multilateralism and promote international cooperation and policy communication. He said the IMF should use economic surveillance, lending support and technical assistance to help members manage rising risks and safeguard global financial stability.

Pan also pointed to the effects of structural factors, including inherent weaknesses in the international monetary system. He said that addressing global imbalances requires countries to pursue their own structural reforms. Economies running deficits should reduce fiscal deficits and raise domestic saving, while surplus economies should appropriately encourage consumption and investment. All countries should draw up medium- and long-term policy plans, make clear commitments and follow through with consistent action.

Discussions over the international monetary system also featured in remarks by PBOC Deputy Governor Tao Ling at the Global Asset Management Forum 2026 Shanghai Suhewan Conference. Tao spoke on advancing RMB internationalization and making the currency easier to use internationally.

Although the RMB's share in trade settlement has risen, the transition from being able to obtain RMB to using it conveniently and holding it over the long term has yet to form a smooth international cycle, Tao said. The PBOC would further improve its measures to connect the different stages of that cycle: Receiving RMB, using it, investing it and hedging risks associated with it.

Tao said the international monetary system has continued to evolve over centuries, with leading currencies serving as a global public good. Changes in the dominant currencies reflect deeper shifts in the world order, she said. 

The post-World War II system centered on the US dollar, with other currencies playing a complementary role. The system is now changing and could become more diversified, Tao said. Such a shift, she added, could encourage countries issuing major currencies to strengthen policy discipline and make the international monetary system more resilient.