Monetary Policy, Exchange Rate, Financial Opening-up, and Internationalization of the Yuan: Pan Gongsheng Releases Four Major Heavyweight Signals

Special Topic: China Development Forum 2026 Annual Conference

On March 22, People’s Bank of China Governor Pan Gongsheng stated at the China Development Forum 2026 Annual Conference that China will increase financial support for economic restructuring and transformation. He fully explained the current direction of China’s monetary policy, the RMB exchange rate, high-level opening of the financial industry, and the path to RMB internationalization, releasing clear and stable financial policy signals.

The government work report set this year’s economic growth target at 4.5% to 5%, leaving more room for economic restructuring and high-quality development. The 14th Five-Year Plan further focuses on high-quality development, strengthening the domestic cycle, and maintaining domestic demand as the main driver.

Pan Gongsheng said that the People’s Bank of China will adhere to a supportive monetary policy stance to create a favorable monetary and financial environment for stable economic growth, high-quality development, and smooth financial market operation.

Regarding monetary policy, Pan Gongsheng clarified that China will continue to implement a moderately easing monetary policy. Currently, social financing conditions remain relaxed, and the total financial volume has achieved reasonable growth. Moving forward, the People’s Bank will carefully balance short-term and long-term considerations, supporting real economic growth while maintaining the health of the financial system, internal and external balance. It will use a combination of tools such as reserve requirement ratios, policy interest rates, and open market operations to ensure ample liquidity.

On the RMB exchange rate, Pan Gongsheng emphasized that, according to IMF classification standards, China implements a managed floating exchange rate system.

This year, the RMB has shown a steady appreciation trend, with about 1.3% appreciation against the US dollar, 3.7% against the euro, 3.2% against the yen, and 2.4% against the British pound.

He clearly stated that China has no need and no intention to devalue the currency to gain trade advantages. The People’s Bank of China’s stance remains clear: market plays a decisive role in exchange rate formation, maintaining exchange rate flexibility, strengthening expectation guidance, and keeping the RMB exchange rate basically stable at a reasonable and balanced level. The PBOC’s expectation management and transparent, internationally aligned macroprudential tools help correct market herd behavior and market failures, preventing destructive imbalances that have repeatedly occurred in international financial history.

Regarding financial industry opening-up, Pan Gongsheng introduced that China will steadily promote high-level opening of the financial sector. It will deepen financial market connectivity and cross-border payment systems to facilitate more investors investing in Chinese financial markets.

China’s stock and bond markets are both the second largest in the world, with market depth, resilience, and liquidity continuously improving. By the end of 2025, overseas institutions and individuals will hold over 10 trillion RMB in domestic stocks, bonds, deposits, and loans.

On RMB internationalization, Pan Gongsheng said that recent years have seen positive progress, providing more diverse currency options for global market participants.

Currently, RMB financing costs are relatively low. By 2025, over 170 billion RMB worth of Panda bonds have been issued by governments, international development agencies, financial institutions, and large enterprises, with offshore RMB bonds issued in Hong Kong being even larger.

Pan Gongsheng emphasized that China will continue to improve the cross-border use of RMB and financial infrastructure. It will carry out diversified monetary and financial cooperation, promote the development of offshore RMB markets, and facilitate cross-border trade and investment activities.