for the real economy. credit impulse is an important indicator to reflect changes in the financial cycle, including the direction of marginal changes in the cycle. measured by the marginal change in the ratio of newly added credit to gross domestic product ( gdp ), china's credit impulse has turned positive and upward since 2023, indicating that the credit is playing an increasingly important role in supporting the economy. since the beginning of 2023, the forecasts for china's economic growth have been revised upward in general. the international monetary fund ( imf ) revised its forecast for china's economic growth this year from 4. 4 percent to 5. 2 percent. and just two days ago, the world bank raised its forecast from 4. 3 percent to 5. 6 percent. the competitive real interest rate of rmb assets is conducive to the value preservation of the rmb held by china's trade and investment partners. measured by the difference between the yield on 2 - year government bonds and the core consumer price index ( cpi ), china's real interest rate is around 1. 7 percent, which is similar to that in the united states after a sharp hike, and is significantly higher than that of developed economies such as germany and japan. amidst the worldwide elevated inflation, the value of rmb bonds as a portfolio diversifier is highlighted. since 2022, both the government bonds and equities have experienced an obvious decline in developed countries, representing a shift from negative correlation to positive, so the benefits of bonds as a portfolio diversifier for equities have decreased sharply. as for emerging markets, their bonds are always highly correlated with global equities, as they are risky assets. in contrast, chinese bonds maintains a negative correlation with the global equities, hence a better diversifier. 2 / 3 bis - central bankers'speeches since 2023, our foreign exchange market has been generally stable. cross - border capital flows have maintained a basic equilibrium, compared with a relatively high surplus at the beginning of the year. foreign exchange reserves have witnessed steady growth, and the rmb exchange rate has remained basically stable at an adaptive and equilibrium level. since mid - april, affected by various internal and external factors, especially the strengthening of the us dollar index due to the us debt ceiling issue, the rising risk aversion driven by small and medium - sized bank risks, and the heightened expectations for fed rate hikes, and considering that the foundation for the economic recovery in

pan gongsheng : global financial cycle - trends and implications keynote speech by mr pan gongsheng, deputy governor of the people's bank of china and safe administrator, at the 14th lujiazui forum " global financial openingup and cooperation : new drivers for economic recovery ", shanghai, 8 june 2023. * * * distinguished party secretary chen, mayor gong, president rousseff, and dear guests, good morning! the topic of my speech today is " global financial cycle : trends and implications ". since the 1990s, the financial indicators such as asset prices, credit growth, bank leverage ratio, and cross - border capital flows have resonated with each other across the world, especially in some developed economies such as the united states and europe. over the medium and long term, financial activities witness obvious periodic fluctuations. since the 1990s, financial markets have experienced three major downturns, namely the dot - com bubble burst in 2000 - 2002, the global financial crisis in 2008 - 2009, and the plunge in the global stock, bond and foreign exchange markets in 2022. the financial indicators such as stocks, bonds, and exchange rates together constitute a financial conditions index ( fci ) that reflects the overall financial situation, and such an index has undergone rapid and sharp tightening during these three downturns. because of the dollar's dominance in the international monetary system, the federal reserve ( fed )'s monetary policy has become an important driver of the global financial cycle. the fed's three rounds of interest rate hikes respectively in 1999 - 2000, 2004 - 2006, and 2022 have led to the three downturns in the global financial cycle. in 2022, the global stock, bond and foreign exchange markets suffered heavily. the global stock market fell by about 20 percent for the whole year, bonds also saw a double - digit decline, cross - border capital flows dropped sharply, and bank credit standards were generally tightened. these are all typical characteristics of a downturn in the global financial cycle. in 2022, the fci of the united states rose from an extremely low level in history, and the tightening regarding degree and speed was second only to that of the global financial crisis in 2008. the reason for this is fed's monetary policy, which experienced drastic tightening after drastic easing. whenever financial conditions in the united states are tightened, some emerging economies with relatively fragile economic fundamentals and high dependence on external financing will face massive capital outflows