Regarding Monetary Policy and RMB Exchange Rate, Pan Gongsheng's Latest Remarks | China Development Forum

Reporter Xin Yuan

The China Development Forum 2026 Annual Conference opened in Beijing on the morning of March 22. People’s Bank of China Governor Pan Gongsheng discussed monetary policy orientation, the RMB exchange rate, and other issues in his speech.

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

Prior to this, according to a message released Thursday on the official website of the PBOC, the expanded meeting of the Party Committee of the People’s Bank of China mentioned the need to continue implementing a moderately easing monetary policy. Promoting stable economic growth and reasonable price increases are key considerations for monetary policy, leveraging the combined effects of incremental and stock policies, as well as the integration of monetary and fiscal policies.

This year’s Government Work Report proposed to continue implementing a moderately easing monetary policy. Promoting stable economic growth and reasonable price increases remain important considerations. The central bank will flexibly and efficiently use tools such as reserve ratio cuts and interest rate reductions to maintain ample liquidity, aligning social financing scale and money supply growth with economic growth and inflation expectations.

Jianlian Chief Economist Dong Ximiao told Jiemian News that in 2026, the core focus of monetary policy will shift from “total quantity easing” to a “three-pronged approach” of “total quantity + structure + price,” emphasizing greater precision and effectiveness.

Dong Ximiao pointed out that considering “promoting economic stability” and “reasonable price increases” as key factors indicates that the central bank is closely monitoring the current low-inflation environment. It aims to restore social expectations and promote economic recovery through a moderately loose monetary environment. Regarding prices, the PBOC will mainly strengthen the implementation and supervision of interest rate policies, regulate financing intermediary costs, and ultimately achieve low overall social financing costs. If the economy faces new downward pressures or external changes, broad-based interest rate cuts and reserve requirement ratio reductions remain likely, with RRR cuts potentially preceding interest rate cuts.

In addition to discussing monetary policy orientation, Pan Gongsheng specifically mentioned in his speech that China has neither the need nor the intention to devalue the currency to gain a trade advantage.

Pan Gongsheng stated that the People’s Bank of China’s stance has always been clear: to uphold the decisive role of the market in exchange rate formation, maintain exchange rate flexibility, strengthen expectation guidance, and keep the RMB exchange rate basically stable at a reasonable and balanced level.

“The PBOC’s expectation guidance and the use of transparent, internationally aligned macroprudential management tools help correct market ‘herd behavior’ and market failures, which is conducive to preventing the destructive imbalances that have repeatedly occurred in international financial history,” Pan Gongsheng said.

Since the second half of 2025, the RMB has shown signs of strengthening, driven by trade surpluses, foreign exchange demand, and a weakening US dollar index, among other factors.

On March 6, at the 14th National People’s Congress Fourth Session economic-themed press conference, Pan Gongsheng also reiterated that China has neither the need nor the intention to devalue the currency to gain a trade advantage. The PBOC’s stance remains clear: to uphold the decisive role of the market in exchange rate formation, maintain exchange rate flexibility, strengthen expectation guidance, and keep the RMB exchange rate basically stable at a reasonable and balanced level. In specific scenarios, macroprudential tools may be used to correct market “herd effects” and negative self-reinforcement.

Regarding future exchange rate trends, Wen Bin, Chief Economist of China Minsheng Bank, told Jiemian News that the external environment will remain complex and changeable in the near future, and the RMB exchange rate will still face significant uncertainty. Export companies should prepare for exchange rate hedging. As the market plays a larger role in exchange rate formation, the RMB may fluctuate both upward and downward, with two-way floating.

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Editor: Cao Ruitong