PBOC says blaming the renminbi for global imbalances shirks responsibility

The People's Bank of China on October 8 released a policy position on the renminbi exchange rate (关于人民币汇率的政策立场). It said global economic imbalances are the combined result of the evolution of the industrial division of labour, inherent contradictions in the international monetary system and countries' investment-savings gaps, that they are not the sole responsibility of surplus or deficit countries, and that all parties need to respond together. [ 1 , 2 , 3 , 4 , 5 ]

The central bank said all countries should pursue structural reform: deficit countries should begin fiscal consolidation and raise their savings rates and industrial competitiveness, while surplus countries should promote growth in consumption and investment. It said individual countries that simply attribute complex international monetary system and structural economic problems to the renminbi exchange rate are shirking and avoiding their own responsibility to adjust, which does not help solve the problems and is in fact a political manoeuvre against a backdrop of protectionism and unilateralism. The documents do not name the countries. [ 1 , 2 , 4 ]

According to Caixin, the statement, published on the central bank's website, said China's direction of market-oriented exchange rate reform is firm and consistent, that the market plays the decisive role in setting the rate, and that China has neither the need nor the intention to gain trade competitive advantage through depreciation. It said China runs a managed floating regime based on market supply and demand with reference to a basket of currencies, and focuses on guarding against large short-term swings, especially sharp short-term depreciation that affects financial stability. Caixin noted that China has drawn attention in international discussions of global imbalances because of strong exports and a growing current account surplus, and that some views link the imbalances to undervalued exchange rates of surplus countries. [ 5 ]

The statement said major industrial countries have all run current account surpluses in the past. In the 1950s and 1960s, US manufacturing value added was around 40% of the global total and the United States was then the largest goods trade surplus country. Since the 1970s and 1980s, it said, surpluses shifted from Japan and Germany to South Korea, Taiwan, Hong Kong and Singapore, and then to China and ASEAN. [ 1 , 4 ]

It said that in recent decades the main surplus countries have rotated while the main deficit country has stayed the same, which it linked to the international monetary system: the issuer of the main reserve currency can expand debt and fiscal spending for long periods, supporting high consumption and low saving and producing long-term trade deficits. It added that some countries' weaker trade competitiveness reflects their own structural difficulties, including high energy and manufacturing costs, lagging infrastructure, rigid regulation and insufficient investment in innovation and digitalisation. [ 1 , 3 , 4 ]

The statement called for medium- and long-term policy commitments, saying trying to solve global structural problems within one to two years is unrealistic and abrupt short-term policy shifts may backfire. It cited the 2025 global tariff war, which it said triggered a rush to import, worsened imbalances and harmed global economic growth. [ 1 , 4 ]