Bloomberg
(Bloomberg) — Chinese President Xi Jinping’s pledge to curb financial risks and build a powerful currency with global reserve status, reiterated in a state publication, is boosting expectations of an accelerated push for yuan internationalization.
“What constitutes a strong financial nation?” according to Xi’s remarks published Saturday by the Qiushi magazine, based on his 2024 speech. “First, it should have a powerful currency, widely used in international trade, investment, and foreign exchange markets, holding the status of a global reserve currency.”
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The remarks in Qiushi, the Communist Party’s flagship journal and a window into high-level policy intent, likely signal China’s drive to internationalize the yuan and expand its financial clout. The timing is pivotal, as the dollar’s haven appeal fades amid Donald Trump’s sporadic tariff policies and global market swings on geopolitical risks.
“Based on various information, the top leadership is preparing to make more financial reforms,” said Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group. “Policymakers could think that it’s a good timing right now because financial institutions have a strong consensus that the dollar is weakening.”
China’s financial system has grown far more complex than in the past, with risks now deeply interconnected, making risk prevention “an eternal theme,” he said.
Financial work, he added, should return to its core functions and improve competitiveness to better serve the real economy and diverse financial needs. “If finance becomes preoccupied with self-circulation and self-expansion, it will become water without a source or a tree without roots, inevitably leading to a crisis,” Xi said.
He also stressed the need for a strong central bank to prevent systemic risks, along with financial institutions that demonstrate “high operational efficiency and strong risk resistance.”
The onshore yuan rose 0.1% against the dollar on Monday after the publication, lifting its year-to-date gain to 0.5%.
–With assistance from Qizi Sun.
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