In a recent address at an international conference in Saudi Arabia, the Governor of China’s central bank highlighted the pivotal role of the yuan in maintaining global financial stability. Pan Gongsheng emphasized that while many currencies have experienced depreciation against the US dollar, the yuan has demonstrated remarkable resilience. This stability is crucial for global economic health and contrasts with the volatility seen in other major currencies.

The Chinese government has implemented various measures to support the yuan's stability, including setting strong daily reference rates and adjusting capital controls. These actions reflect Beijing's broader strategy to position the yuan as a robust alternative to the US dollar. The central bank has prioritized defending the yuan from depreciation pressures, even opting to delay monetary easing despite external challenges such as trade tariffs. Over the past year, the yuan has fluctuated within a narrow range, showcasing its strength amidst widening yield gaps between Chinese and US government bonds.

Despite these efforts, China faces significant domestic challenges. Consumer demand remains fragile, and the country is experiencing prolonged deflationary pressures. Authorities are now focusing on boosting household income and enhancing social safety nets to stimulate consumption. Pan acknowledged that stronger price growth and increased consumer spending are necessary for economic recovery. To address these issues, China plans to adopt a proactive fiscal approach and maintain an accommodative monetary policy. Officials aim to mitigate risks from local government debt and stabilize the property market, which has been under strain.

Global uncertainties, including rising trade protectionism and geopolitical tensions, pose additional challenges. However, China remains committed to opening its economy and advocating for free trade and fair competition. Pan stressed that escalating protectionism could disrupt trade and investment, driving up inflation expectations and undermining long-term global growth. By reinforcing the yuan's stability and promoting open economic policies, China aims to contribute positively to the global financial landscape, fostering resilience and sustainable development.