yi gang : speech - 12th lujiazui forum speech by mr yi gang, governor of the people's bank of china, at the 12th lujiazui forum " shanghai international financial center 2020 : new starting point, new mission, new vision ”, shanghai, 18 june 2020. * * * honorable vice premier liu he, secretary li qiang, mayor gong zheng, ladies and gentlemen, good morning! during general secretary xi jinping ’ s inspection tour in shanghai last november, he noted that shanghai should “ strengthen its function of allocating global resources and actively allocate global resources, including capital, information, technology, talents and goods ”, which pointed out the direction for the development of shanghai as an international financial center. the address by vice premier liu he is very important and greatly instructive for our financial work. i also fully agree with the discourse secretary li qiang has just made in his address on accelerating the building of shanghai as an international financial center. at the previous lujiazui forum, i proposed the “ five centers ” that we should focus on in building shanghai as an international financial center. here, i would like to further discuss the “ five centers ” with you. first, shanghai is becoming a center for rmb - denominated asset allocation. that is to say, when world - class investors plan to invest in rmb - denominated assets, they will regard shanghai as their first choice. global institutional investors can conveniently conduct crossborder investment and financing activities here. notably, china ’ s economic fundamentals remain sound, with monetary policy within the normal range. the rmb interest rates are at the lowest level among developing countries, but there is a relatively remarkable positive spread compared with the interest rates of major convertible currencies. in this sense, rmb - denominated assets are fairly attractive for global capital allocation. second, shanghai is becoming a center for risk management of rmb - denominated financial assets. after investing in rmb - denominated assets, investors, domestic and abroad, are bound to diversify and manage their risks on a continuous basis. in shanghai, all factors related to risk management are improving. first, in terms of pricing, continuous pricing has been realized for all classes of rmb - denominated assets. second, in terms of transaction, the rmb financial market enjoys adequate liquidity as well as sound depth and width, allowing buy - in and sell - out at

and fdi in china, and the speculative factors are also unlikely to leave right away. under the managed floating exchange rate regime, the pbc will gradually reduce its managing role in the foreign exchange market in line with the situation, which will lead to a slower growth of the foreign reserves. 25. after the asian financial crisis, there emerged some new views and discussions with regard to setting a higher level as the rational foreign exchange reserve holding. these developments are also related to the severe shocks experienced and lessons learned by the crisis hit countries. 26. if two comparable countries have different sizes of external debts and different stocks of fdi, their foreign reserves should not be held at the same level. external debts need to be repaid, and fdi entails dividend remittances and they may even withdraw. besides, some speculative hot money, if existed, could also seize the opportunity to exit at any time. all these factors bear some influences on the quantitative level of foreign reserve holding. if measured by per capita level, china ’ s foreign reserves are not high. wto rules 27. the wto mechanism has established game rules on a multilateral basis that enable all members to win ; it is also a win - win game for china and the us. although members may dispute regarding some imbalances, it at least gives a room for the differences to be resolved through negotiations. if anybody designs a lose - lose game for us and china, it hurts both countries, and designer himself will be in a dilemma whether the game should go on or not. thus we have to choose and play a win - win game of free trade and anti - protectionism.