CCTV News: The State Council Information Office held a series of press conferences on "The Achievements of China's High-Quality Economic Development" on January 14 to introduce the relevant situation of financial support for high-quality economic development.
Xuan Changneng, deputy governor of the People's Bank of China, said that the implementation of the People's Bank of China mainly considers the domestic economic and financial situation, and of course it will also take into account internal and external balance. In 2024, the international situation was complex and changeable, and multiple factors promoted the turbulent and strengthening of the US dollar index. China's foreign exchange market showed very good resilience. The RMB exchange rate generally showed a two-way fluctuation trend, maintained basic stability under complex situations, and performed relatively well among major currencies. It created favorable conditions for China to independently implement monetary policy and played a positive role in stabilizing the economy and foreign trade. At the end of 2024, the RMB Exchange Rate Index (CFETS), which measures the exchange rate changes of the RMB against a basket of currencies, was 101.47, up 4.2% from the end of the previous year; the RMB exchange rate against the US dollar closed at 7.2988, depreciating by 2.8% from the end of the previous year, and the US dollar index rose by 7% during the same period, and the RMB's resilience was fully reflected.
Xuan Changneng pointed out that in the future, the complexity, severity and uncertainty of the external environment may further increase, but China's economic foundation is solid, the current account surplus remains, cross-border capital flows are independent balanced, foreign exchange reserves are sufficient, and the foreign exchange market is resilient, providing certainty and strong support for maintaining the basic stability of the RMB exchange rate.
First, the macro economy market is more solid. Since last year, a package of incremental support policies issued especially since September last year will continue to be implemented and effective. The Central Economic Work Conference has deployed a more proactive fiscal policy and a moderately loose monetary policy in 2025, which will further consolidate the positive trend of China's economic recovery.
The second is that the current account has maintained a surplus for many years. The surplus of goods trade in the first 11 months of 2024 was US$884.6 billion, an increase of 18.4% year-on-year, providing strong guarantees for balancing foreign exchange supply and demand.
The third is the independent balance of cross-border capital flows. The opening of the financial market is steadily advancing, and the facilitation level of cross-border investment and financing continues to improve, attracting stable inflows of medium- and long-term overseas capital.
Fourth, the foreign exchange reserve market remains stable and effectively plays the role of ballast for maintaining national economic and financial stability.
Fifth, the foreign exchange market is more resilient. Market participants are more mature, trading behaviors are more rational, the concept of neutral exchange rate risk is constantly strengthened, and more exchange rate hedging tools are used to provide a very important micro-foundation for the stable operation of the foreign exchange market and the balance between foreign exchange supply and demand. Currently, the cross-border RMB revenue and expenditure account for about 30% of the goods trade, and the proportion of foreign exchange hedging of enterprises reaches 27%. These are all very good micro-foundations of the foreign exchange market.
Xuan Changneng emphasized that the People's Bank of China's exchange rate policy stance is clear and consistent, and the goal of maintaining the basic stability of the RMB exchange rate will not change. Over the years, we have accumulated rich experience in dealing with external shocks. We have the confidence, conditions and ability to resolutely achieve our goals. In the next stage, comprehensive measures will continue to be taken to enhance the resilience of the foreign exchange market, stabilize market expectations, strengthen market management, resolutely correct market pro-cyclical behaviors, resolutely deal with behaviors that disrupt market order, resolutely prevent the risk of exchange rate overshooting, and maintain the basic stability of the RMB exchange rate at a reasonable equilibrium level.
