yi gang : keynote speech - 13th lujiazui forum keynote speech by mr yi gang, governor of the people's bank of china, at the 13th lujiazui forum, shanghei, 10 june 2021. * * * honorable secretary li qiang, mayor gong zheng, vice mayor wu qing, chairman guo shuqing, chairman yi huiman, administrator pan gongsheng, ladies and gentlemen, good morning! as the co - chair of the forum, i would like to extend warm welcome to all distinguished guests and friends attending the 13th lujiazui forum. lujiazui forum has been held 12 times. it has stood witness to the progress of china ’ s financial sector and the rapid development of shanghai as an international financial center. china ’ s financial sector has provided strong support to covid - 19 response since last year and served as a backstop to china ’ s fast economic recovery. the development of shanghai as an international financial center has also seen new progress. for instance, the first wholly foreignowned life insurance firm and public equity fund, as well as the first foreign - controlled wealth management firm have been established in shanghai ; the first domestic interest rate options and a number of new globally - traded futures products have been launched here ; shanghai is also one of the frontrunners in the pilot regulation on fintech innovation ; and over 900 overseas institutions have entered china ’ s interbank market, with total bond holdings hitting rmb3. 3 trillion. we are pleased to note that shanghai has ranked the third among all international financial centers in the world for two consecutive times. i would like to congratulate shanghai on this remarkable achievement on behalf of the pboc. this year, the forum focuses on major issues such as financial support for peaking carbon emissions and achieving carbon neutrality, scientific and technological innovation, the well - being of the people and the opening - up of the financial sector. they are all important issues for the financial system as we set out to implement the new concepts of innovative, coordinated, green, open and shared development. they will go a long way in building a new development paradigm and achieving high - quality economic development. today, i would like to take this opportunity to share with you my observations on the monetary policy, green finance and inclusive finance. as china enters a new era of development, its demographic, resource, industrial and regional structures are all undergoing profound adjustments, which in turn, will have an impact on potential economic growth and

price levels. as the chinese economy shifts from high - speed growth to high - quality development, the economic aggregate will keep rising. a bigger base number, coupled with slower productivity growth and demographic changes, will naturally lead to somewhat slower potential growth. the demographic changes will also have implications for supply and demand. in an aging society, growth driven by capital and labor inputs is hard to sustain. sustainable growth should thus largely depend on improving total factor productivity ( tfp ) and unleashing the economic potential through reforms. despite the severe impacts of covid - 19 of last year, we can still say with comfort that china ’ s gdp is close to its potential growth. monetary policy should pay attention to the impact of structural changes on prices. an aging 1 / 3 bis central bankers'speeches population is disinflationary, as precautionary savings will rise while the propensity to consume will drop. the green transition, however, will drive prices up. then, what is green transition? it is defined as a shift to a low - carbon way of production and living. to put it simply, green transition encourages more use of clean energy, and less fossil fuel, a major source of carbon emission. however, under current technological conditions, clean energy is more expensive and less stable than fossil fuels. that is why the green premium came into being. right now, the cost of fossil carbon emission is almost non - existent. therefore, the job of green transition is to make the implicit cost of fossil carbon emissions explicit and impose restrictions on them. this will require for one, that emitters pay for incremental carbon emissions, and for two, that existing emission rights be made tradable through proper pricing. this way, those that reduce emissions will be rewarded while the emitters will pay their price. production and consumption will then realize a low - carbon transition. such a transition, however, will raise carbon emission - related costs and create upward structural pressure on prices. as the upward and downward pressure on prices in the above analysis offset each other to some extent, the overall price level is expected to stay stable. driven by rapidly rising commodity prices, global inflation will rise in the short run. however, there have been highly divergent views over whether inflation will become a long - term trend. despite the covid - 19 shock, china managed to maintain a normal monetary policy last year. a stable domestic demand also helped with price stability. our ppi has seen big increases