yi gang : speech - g30 international banking seminar speech by mr yi gang, governor of the people's bank of china, at the 2021 g30 international banking seminar, 20 october 2021. * * * it gives me great pleasure to attend the 36th international banking seminar. the world economy is recovering, but with growing divergence. i totally agree with kristalina ’ s analysis. we confront some common challenges such as surging energy prices and supply chain bottlenecks. meanwhile, we have to answer questions such as if the inflation is transitory, when and how to exit from the qe policy, and how to deal with policy spillovers. on the covid - 19 front, despite some sporadic cases, the pandemic is under good control in china. close to 80 % of the chinese population have been vaccinated and economic activities are now basically business as usual. but covid - 19 resurgence elsewhere in the world continues to create disruption to supply chains and supply bottlenecks may well lead to higher inflation and derail economic recovery. now, let me turn to china ’ s economic outlook. china ’ s gdp grew by 12. 7 % y - o - y in the first half of this year. we expect it to grow around 8 % for the whole year. due to floods and sporadic covid - 19 cases, the growth is faced with certain challenges, but the trajectory of economic recovery remains unchanged. ppi has remained high in china, whereas cpi growth has been very flat. in september, ppi and cpi were up by 10. 7 % and 0. 7 % y - o - y respectively. the rapid increase in ppi can be largely explained by rising raw material prices, such as energy and metals. we expect the ppi to remain high for a few months before the upward pressure wanes at the end of this year. cpi growth remains moderate mainly because of falling food prices, especially falling price of pork in china. the job market is stable. in august, the urban surveyed unemployment rate was 5. 1 %, the same as july. exports and imports are quite strong. the current account surplus stays within a reasonable range. it is around 1. 5 % of the gdp in the first half of 2021. the chinese economy is doing well in general, but we still face some challenges. namely, mounting downward pressure on growth, rising macro - leverage ratio, operation difficulties of small and medium - sized banks and default risks for certain

the financial sector. under the negative list regime, the market access and business operations of financial institutions must also meet the qualification requirements and be conducted with licenses. there is no contradiction between the negative list management and the strengthening of interim and ex - post oversight, either. under the negative list mode, regulators can shift more resources from access management to interim and ex - post oversight to improve regulatory efficiency. second, we will coordinate and promote the opening - up of the financial service sector, the reform of the rmb exchange rate formation mechanism and rmb internationalization. the reform of the rmb exchange rate formation mechanism should aim at enhancing the flexibility of the rmb exchange rate and allowing the exchange rate to act as an “ automatic stabilizer ” in macroeconomic stability and balance of payments. the internationalization of rmb should be market - oriented. regulatory authorities should reduce the restrictions on the cross - border use of rmb. besides the market - based principle, we should also improve the support system for the use of domestic currency, which will in turn create more favorable environment and conditions for the market to play its due role. third, we will prevent risks while accelerating opening - up. we should intensify macroprudential management, implement more professional and effective financial regulation, establish sound “ firewalls ”, improve the capability of forestalling and defusing major risks, and align our regulatory competence with the level of opening - up. 2 / 3 bis central bankers'speeches in the new situation, based on our weaknesses and the demand for higher - level opening - up, we will further financial opening - up toward greater progress and provide strong support to the building of a new development pattern and high - quality economic development. thank you. 3 / 3 bis central bankers'speeches