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China’s central bank genuinely believes that the yuan is holding the world’s financial system together. On Sunday, People’s Bank of China (PBOC) Governor Pan Gongsheng told global leaders at the AlUla Conference for Emerging Market Economies in Saudi Arabia that while other currencies are crumbling against the rising U.S. dollar, the yuan has stayed steady. “Recently, a number of factors have pushed up (the) dollar index, and non-dollar currencies have mostly depreciated. But RMB (yuan) has remained largely stable despite the high market volatility,” Pan said at the event, which was organized by the International Monetary Fund (IMF) and Saudi Arabia’s Finance Ministry. China pushes domestic spending over investment Pan said China is moving away from relying on massive infrastructure projects to drive growth and instead focusing on domestic consumption. The government is raising household incomes, offering subsidies, and rolling out pro-consumption policies to keep the economy moving. China has made 2025 the year of consumption growth. The goal is simple: get people to spend more money instead of relying on exports and investment-heavy growth. Pan said China’s price growth and consumer demand could be stronger, but he’s confident that the economy is on solid ground, with risks from local government debt and the real estate sector shrinking. Monetary policy is also changing a bit. Pan said that China will use proactive fiscal policies and accommodative monetary measures, with an emphasis on counter-cyclical adjustments to keep financial markets stable. China is facing headwinds, though. “Rising trade protectionism, geopolitical tensions, and the fragmentation of the global economy” are challenges Beijing cannot ignore, Pan said. Still, he stressed that China is committed to keeping its markets open and pushing forward with economic reforms. Asian central banks take on the dollar with currency forwards China isn’t the only country fighting back against the…

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Filed under: News - @ February 16, 2025 11:08 pm