Speech by Pan Gongsheng, Governor of the People's Bank of China, at the 2026 China Development High-Level Forum

Analyzing global economic imbalances not only involves looking at goods trade, but also looking at services trade; not only involves looking at current accounts, but also looking at financial accounts. China is the largest country with a trade surplus in goods and the largest country with a trade deficit in services. The current account surplus accumulated by China is allocated to different regions and industries globally through investments by companies, banks, etc., injecting liquidity into global financial markets, and effectively supporting global economic development and financial stability. It is important to analyze not only from a static perspective but also from a dynamic perspective. From a time dimension, supply-demand balance is a relative concept, and the expansion and contraction of supply-demand gaps will be disturbed by various factors, whether at a global level or within individual economies. For example, recent conflicts in the Middle East have caused a supply-side shock in oil, leading to a significant increase in oil prices. However, looking at a longer period, market forces will automatically adjust to achieve dynamic supply-demand balance. Economic development, income growth, changes in consumer preferences, and technological advances create new forms of supply and demand, creating new markets. From a spatial dimension, whether between countries or within different regions within a country, building a unified large market, engaging in division of labor and trade based on comparative advantage, can maximize overall welfare. Looking back to the 1980s and 90s when I studied economics in university, a common consensus in the global economics community was that a free trade system based on comparative advantage is the foundation of global prosperity and helps enhance global welfare. International trade is not mandatory, but the result of choices made voluntarily by millions of businesses and households. It is important to examine not only economic factors but also non-economic factors. Last year, the tariff war and trade war led to "export rush", the broadening of the concept of national security resulted in increased export control measures, these factors disrupted expectations of businesses and households, causing significant disturbances to global economic balance. It is important to analyze not only the international economic and trade system but also the international monetary system. Trade surpluses are the result of the evolution of the global division of labor pattern. In the past forty years, major surplus countries have mostly been countries with strong competitiveness in manufacturing, such as Japan, Germany, Switzerland, China, and in recent years, gradually shifting to emerging market economies in Southeast Asia; but the major deficit countries have remained the same, which is related to the inherent flaws in the international monetary system. In the international monetary system dominated by a single sovereign currency, major reserve currency issuing countries can implement deficit fiscal policies at a low financing cost, exporting currency through large-scale current account deficits in the long term. At the same time, due to continuous capital inflows, this objectively leads to overvaluation of the main reserve currency, to some extent weakening the country's manufacturing competitiveness. At present, stable, rational, and predictable cooperation is particularly precious. Fragmented trade is undermining the foundation of free trade. We need to firmly oppose all forms of trade protectionism, consolidate and develop a multilateral framework and international economic and trade order centered on the World Trade Organization and based on rules, promoting a beneficial and inclusive economic globalization.