China to Accelerate Becoming the Core Market of Global Demand! Latest Remarks from Pan Gongsheng!

On March 22, Pan Gongsheng, Governor of the People’s Bank of China, delivered a detailed speech during the China Development Forum 2026 Annual Meeting, covering topics such as the sources of China’s industrial international competitiveness, how to view and analyze global economic imbalances, and how to increase financial support for China’s economic restructuring.

(Source: Provided by the organizer)

Pan Gongsheng stated that the People’s Bank of China will continue to implement a moderately loose monetary policy. Currently, China’s social financing conditions are relaxed, and the total financial volume is growing reasonably. We will balance short-term and long-term considerations, support real economic growth while maintaining the health of the financial system, and manage internal and external balance. We will use a variety of monetary policy tools such as reserve requirement ratios, policy interest rates, and open market operations to ensure ample liquidity.

Comprehensive Understanding of the Sources of China’s Industrial International Competitiveness

“China’s industrial international competitiveness has benefited primarily from over 40 years of reform and opening-up. In opening up to the world, we learn from our international partners, including the excellent global companies present here today. We learn through competition and grow through learning,” Pan Gongsheng mentioned when discussing the sources of China’s industrial competitiveness.

Meanwhile, he pointed out that a large-scale market, a complete industrial and supply chain system, abundant, high-quality, skilled, and diligent labor resources—especially technical talent—and continuous R&D investment leading to technological innovation all play crucial roles in enhancing China’s industrial competitiveness.

For example, the large market allows technological innovations to be quickly industrialized, scaled, commercialized, and iterated, creating technological leadership and cost advantages.

“Regarding the sources of China’s industrial competitiveness, some international perceptions still attribute it to unreasonable industrial subsidies provided by the Chinese government. If there are such doubts, it is helpful to visit China more often and see for yourself, which will lead to a more accurate and comprehensive understanding of China’s industries,” Pan Gongsheng emphasized. China advocates fair, healthy, and competitive markets. For some companies engaged in ‘involution’-style competition, the central government has taken measures to regulate local government investment promotion behaviors and prohibit unreasonable preferential policies such as tax and land use incentives, aiming to build a unified national market. The People’s Bank of China guides financial institutions to assess risks scientifically and to curb ‘involution’-style competition industries from a financial perspective.

Analyzing Global Economic Imbalances with Five “Not Only… But Also…”

Regarding the current widely discussed issue of global economic imbalances, Pan Gongsheng provided an in-depth analysis using five “Not only… but also…” statements.

Analyzing global economic imbalances requires looking not only at goods trade but also at service trade; not only at current accounts but also at financial accounts.

“China is the world’s largest surplus country in goods trade and the largest deficit country in services trade. The surplus accumulated in the current account is invested abroad by enterprises and banks, allocating resources across different regions and industries globally, injecting liquidity into the global financial markets, and strongly supporting global economic development and financial stability,” Pan Gongsheng emphasized.

Analysis should be both static and dynamic.

Pan Gongsheng pointed out that from a temporal perspective, supply and demand balance is a relative concept. Whether globally or within individual economies, the expansion and contraction of supply-demand gaps are affected by many factors. For example, recent geopolitical tensions in the Middle East caused shocks to oil supply and a sharp rise in oil prices. However, over the longer term, market forces will self-adjust to achieve dynamic supply-demand balance. Economic development, income growth, changes in consumer preferences, and technological progress all create new supply and demand patterns and new markets. From a spatial perspective, whether between countries or within different regions of a country, building a unified large market and engaging in division of labor and trade based on comparative advantages can maximize overall welfare.

“Looking back to the 1980s and 1990s when I studied economics at university, a fundamental consensus in the global economics community was that a free trade system based on comparative advantage is the foundation of global prosperity and helps enhance global well-being. International trade is not mandatory; it results from the voluntary choices of hundreds of millions of enterprises and households,” Pan Gongsheng said.

Attention should be paid not only to economic factors but also to non-economic factors.

Pan Gongsheng noted that last year’s tariff and trade wars triggered a ‘rush for exports,’ and the broadening concept of national security led to increased export controls. These factors disrupted corporate and household expectations and caused significant disturbances to global economic balance.

Analysis should include not only the international trade system but also the international monetary system.

Trade surpluses are the result of evolving global industrial division. Over the past 40 years, the main surplus countries have generally been those with strong manufacturing competitiveness, such as Japan, Germany, Switzerland, and China. Recently, surplus has gradually shifted to some emerging markets in Southeast Asia. However, the main deficit countries have remained unchanged, which is related to inherent flaws in the international monetary system.

“In a global monetary system dominated by a single sovereign currency, the issuing country of the main reserve currency can run deficits for a long time at low financing costs, exporting its currency through large current account deficits. Meanwhile, continuous capital inflows tend to overvalue the main reserve currency, which can, to some extent, weaken the manufacturing competitiveness of that country,” Pan Gongsheng explained.

He emphasized that stability, rationality, and predictability in cooperation are especially valuable today. The fragmentation of trade is undermining the foundation of free trade. We need to more firmly oppose all forms of trade protectionism, consolidate and develop a multilateral framework centered on the World Trade Organization and rule-based international economic and trade order, and promote inclusive and equitable globalization.

China Will Accelerate Becoming a Core Market for Global Demand

Pan Gongsheng pointed out that China is actively promoting the transformation of its economic growth model to improve quality and sustainability. The 2026 government work report and the 14th Five-Year Plan clearly outline the goals and main policies for economic and social development this year and over the next five years. They set reasonable expectations for economic growth while focusing on transforming the growth mode.

Regarding the growth target, Pan Gongsheng explained that, mathematically, the growth rate is the ratio of annual GDP increase to the total GDP. By 2025, China’s GDP exceeded 140 trillion yuan, with annual increments equivalent to the total economic output of a medium-sized economy. China needs to maintain a reasonable growth rate, but the quality and sustainability of growth are more important. The government work report set this year’s economic growth target at 4.5%–5%, leaving more room for structural adjustments and high-quality development.

On transforming the growth mode, Pan Gongsheng said that the 14th Five-Year Plan focuses on high-quality development, strengthening the domestic cycle, and prioritizing domestic demand. Policies to boost consumption will be implemented, income distribution will be improved, social security systems optimized, and investments and consumption in education, healthcare, and elderly care expanded to significantly increase residents’ consumption rate. The development of the service sector will be vigorously promoted, along with reform, innovation, and opening-up in services. China aims to accelerate becoming a core market for global demand based on its status as a major manufacturing power.

He emphasized that dynamic economic balance and structural transformation require medium- and long-term reform plans and commitments, and firm implementation, rather than constant back-and-forth adjustments. This year, China will implement the 15th Five-Year Plan. Formulating and continuously implementing five-year plans is an important experience and institutional advantage in China’s reform and development.

Increasing Financial Support for China’s Economic Restructuring

To strengthen financial support for China’s economic restructuring, Pan Gongsheng said that the People’s Bank of China will adhere to a supportive monetary policy stance, creating a favorable monetary and financial environment for stable growth, high-quality development, and smooth financial markets.

According to the International Monetary Fund’s classification, China operates a managed floating exchange rate system. Pan Gongsheng emphasized that China does not need, nor does it intend, to devalue its currency to gain a trade advantage. The People’s Bank of China’s stance remains clear: to let the market play a decisive role in exchange rate formation, maintain exchange rate flexibility, and strengthen expectations guidance to keep the RMB exchange rate basically stable at a reasonable and balanced level. Through transparent, rule-based macroprudential management tools, the People’s Bank of China aims to correct market herding effects and market failures, helping prevent destructive imbalances that have repeatedly occurred in international financial history.

He pointed out that the People’s Bank of China will steadily promote high-level opening of the financial sector, deepen interconnection of financial markets and cross-border payment systems, and facilitate more investors to participate in China’s financial markets. Both China’s stock and bond markets rank second globally, with market depth, resilience, and liquidity continuously improving.

In recent years, the internationalization of the RMB has made positive progress, providing more diverse currency options for domestic and foreign entities. Pan Gongsheng said that currently, the cost of RMB financing is relatively low. By 2025, the issuance of Panda bonds by governments, international development agencies, financial institutions, and large enterprises will exceed 170 billion yuan, and offshore RMB bonds issued in Hong Kong will be even larger. China will continue to improve cross-border RMB usage arrangements and financial infrastructure, promote diversified currency cooperation, develop offshore RMB markets, and facilitate cross-border trade and investment activities.