From October 21 to 23, the Annual Conference of Financial Street Forum 2020 was held in Beijing. Tsinghua University PBC School of Finance (PBCSF) supported the Forum as the only academic support unit. Organized by Tsinghua PBSCSF, the “Changes and Future of Global Economy” Session at Parallel Forum I kicked off on the evening of October 21.

Zhou Xiaochuan, Vice Chairman of the Boao Forum for Asia, President of the China Society for Finance and Banking and Honorary Dean of PBCSF; Justin Yifu Lin, Professor and Dean of the Institute of New Structural Economics at Peking University, Dean of the Institute of South-South Cooperation and Development of Peking University and Honorable Dean of the National School of Development of Peking University; Michael Spence, Nobel Prize Laureate in Economic Sciences 2001; and Hans-Paul Bürkner, Chairman of the Boston Consulting Group, joined the Session and contributed their insights.

Zhu Min, Chair of the Tsinghua University National Institute of Financial Research and former Deputy Managing Director of the International Monetary Fund, moderated the Session. Attendees of this Session also included Yin Yong, Member of the Standing Committee of the CPC Beijing Municipal Committee and Vice Mayor of the People’s Government of Beijing Municipality, and Zhang Xiaohui, Dean of Tsinghua PBCSF.

Mr.Zhu Min

Recently, the strong trend of the exchange rates of RMB has attracted concerns around the world. In his speech, Zhou Xiaochuan pointed out that it’s not appropriate to focus only on trending of price and indexes. Since China adopts a floating exchange rates system, the RMB-nominated assets buy-ins change along with fluctuation of CNY to USD exchange rate, so the prospects of RMB is promising.

Zhou believed that the following factors may facilitate the globalization of RMB in the future: firstly, against the rising protectionism, China resolutely sticks to the path of opening up its real economy to global market; secondly, the Chinese financial market has gradually removed barriers and eliminated practices of protectionism, as demonstrated by the induction of Shanghai-Hong Kong Stock Connect, Shenzhen-Hong Kong Stock Connect and Bond Connect in the financial market, and deepening of globalization of the bond and derivatives market; thirdly, China has already broken through mental set of rate 7 as threshold of CNY versus US dollar.

Zhou indicated that the convertibility of capital account doesn’t mean full liberalization, China needs to further set up contingency measures, and in light of objectives, China needs to do more research and policy design to promote high-geared opening-up initiatives and high-quality open economies.

Mr.Zhou Xiaochuan

China is establishing a new dual circulation development system in which domestic cycle plays a leading role while international economic cycle remains its extension and supplement. Justin Yifu Lin shared his insights into this new development pattern in the Session. He pointed out that the proportion of export in China’s GDP has decreased from 35.4% in 2006 to 17.4% in 2019, which means that the domestic economic cycle was already moving to an increasing leading role, and reflects the expansion of China’s economic output and hiking proportion of service sector.

Lin believed that recognizing the fact that “the domestic economic cycle as leading role” not only helps relieve the concerns about the external environment and enhance China’s confidence, but also is conducive to changing the opinion held by countries that China’s export orientation leads to imbalance. Lin said that there are many uncertainties facing the transition of the global economy. But under the new development system, China’s economy will definitely navigate steadily in the transition and still have potential to grow at 8% minimum.

Mr. Justin Yifu Lin

Michael Spence attended the conference by webinar. He expressed his opinions in three aspects: global economic development and its defining factors in the post-pandemic era, the role of China in the recovery of global economy, and the influence of accelerated development of digital technologies. He believed that in the course of recovery, countries are obviously differentiated, and problems of sovereign debts have emerged. Central banks are cutting rate to battle the pandemic impact, while their sovereign debts are at brink of insolvency, seriously inflicting business. He also said that China is playing a key role in the global recovery process, rebounding earlier and quicker than other economies, and will continue to play a critical role the way ahead.

Mr. Michael Spence in Session Webinar

Hans-Paul Bürkner also attended this Session via Webinar. He said that Europe, China and North America are three important driving factors of world economy. And global recovery calls for cooperation among these three parties. In addition, the re-structuring of an international system based on rules is very essential to the stable development of global supply chain. Moreover, Bürkner pointed out that the governments are expected to stimulate the economy through policies in the next two years to protect competitive businesses, and should reduce budget deficits from 2022 on. When talking about the influence of digitalization, Bürkner said that when using technologies to replace human labor, the enterprises need to receive training, education in new skills and build up new knowledge, and promote their own business and add jobs by digitalization.

Mr. Hans-Paul Bürkner in Session Webinar

During the following discussion, the guests further exchanged on matters as internationalization of RMB and the opening of capital accounts.

Themed on “Financial Cooperation and Reform under Global Changes”, the Annual Conference of Financial Street Forum 2020 was jointly organized by the People’s Government of Beijing Municipality, the People’s Bank of China, Xinhua News Agency, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission and the State Administration of Foreign Exchanges.

Venue of the Forum Session