International Monetary Forum 2022 Event Series No. 2: Symposium on Financial Openness and High-Quality Development

2022-08-21 IMI

On July 24, the Symposium on Financial Openness and High-Quality Development was successfully held online, hosted by the International Monetary Institute (IMI), Renmin University of China, with the School of Finance and Economics of Renmin University of China and the China Center for Financial and Fiscal Policy Research as its organizer and the China Industrial Economics Journal as its co-organizer. This symposium is event series No. 2 of the “International Monetary Forum 2022” and is divided into two sessions: opening ceremony and thesis presentation.

The opening ceremony was hosted by Qu Qiang, member of IMI International Committee and director of China Financial Policy Research Center. Shi Dan, Director of Institute of Industrial Economics of the Chinese Academy of Social Sciences and Editor-in-Chief of China Industrial Economics, and Zhuang Yumin, Dean of the School of Finance of Renmin University of China and Chairman of IMI, delivered opening speeches respectively. The symposium has invited four keynote speakers: Wu Xiaoqiu, former Vice President of Renmin University of China and President of China Capital Market Research Institute; Wang Guogang, member of IMI International Committee, Professor of School of Finance of Renmin University of China and member of Academic Committee of CASS; Chen Daofu, Deputy Director of Research Institute of Finance of Development Research Center of the State Council; Guan Tao, Global Chief Economist of BOC International and former Director of Department of Balance of Payments of SAFE. The guest hosts of the keynote session were Zhang Qizai, Secretary of the Commission for Discipline Inspection and Deputy Director of the Institute of Industrial Economics of the Chinese Academy of Social Sciences and Deputy Editor-in-Chief of China Industrial Economics, and Zhang Chengsi, Member of IMI International Committee and Vice Dean of the School of Finance of Renmin University of China.

Wu Xiaoqiu spoke on “What does financial openness mean for China?” He first analyzed the meaning of financial openness—it mainly consists of three parts: local currency liberalization, institutional internationalization and full market opening. In China, the pace of internationalization of financial institutions is fast and the institutional arrangement of internationalization has been completed, while the liberalization of RMB and the full opening of capital market are still in the exploration stage. Then, Wu analyzed what are the difficulties of financial openness for China. He pointed out three worries: firstly, the legal system is still weak and needs further improvement; secondly, there are concerns about the security of property rights; thirdly, there are hidden worries about the sustainability of the economy, especially the innovation capacity of the economy. Again, Wu discussed what did financial openness mean for China: the expansion of the financial resource allocation boundary, the improvement of the risk allocation mechanism, the enhancement of the international transmission effect of China’s financial risks; the RMB becomes an international type of currency, thus providing a new alternative currency for the global monetary system; the modernization process of Chinese society is further accelerated. Finally, Wu pointed out the goals of China’s financial openness: first, to enhance the financial competitiveness of the Chinese economy; second, to realize the liberalization of the RMB; and third, to build China’s financial market, especially the capital market, into a new international financial center in the world, with RMB-denominated assets becoming important assets available to international investors.


Wang Guogang delivered a speech focusing on Chinese finance going out. He reviewed the history of the development of multilateralism rules, which has gone through three stages: unilateralism, multilateralism manipulated by the US (dollar) unilateralism, and multilateral mechanism. To implement the “Belt and Road” Initiative, three interrelated challenges need to be addressed in financial practice: the “Belt and Road” infrastructure requires huge amounts of capital, the nature of the huge amounts of capital needs discussion, and how to prevent political risks. In building a “community of interests”, the structural mechanism of capital can coalesce the interests of various investors and bring them together to mitigate risks. In order to form a diversified capital structure, three issues should be resolved: consensus among investors of different countries on investment projects; implementation of the mechanism of equity equality in equity investment; and formation of a mechanism for trading capital rights and interests. As to the realization of diversified capital structure, he proposed that in the construction of “Belt and Road”, diversified capital structure can be developed from four interrelated levels: establishing multilateral financial institutions; forming and improving multilateral mechanisms in financial products; establishing multilateral financial trading markets; and mapping out certain geographical areas in countries to develop multilateral economy. In this process, long-term synergy effect between equity equality and equity financing is crucial. If the idea of diversifying capital and implementing multilateral mechanisms can be carried out, the construction of “Belt and Road” can be responded to by all countries, the financial sector will receive strong support, and the internationalization of RMB will be get rid of the limitation brought by foreign exchange reserves.


Chen Daofu shared the progress of China's financial openness and his thoughts on further opening up. Firstly, Chen affirmed that China had made good progress toward financial openness: China's financial service industry has basically achieved national treatment under the negative list approach, the financial market has continued to expand the channel for its opening-up, the RMB offshore market has developed rapidly, and China has implemented a managed floating exchange rate system based on market supply and demand and with reference to a basket of currencies. Secondly, Chen pointed out the characteristics of China's financial opening process: to coordinate and promote the opening of both the financial service industry and the financial market and the marketization reform of the RMB exchange rate; to open up the market with the focus on trading links, and to improve convenience while regulating the currency exchange rate; to enable the internationalization of RMB and financial openness to reinforce each other, and to let the RMB offshore market play its full part. Finally, Chen proposed to further promote financial openness. Currently, the international environment is complex and severe, the financial market is turbulent, and the opening of the financial market has substantially affected cross-border capital flows and exchange rates, making the relationship between finance and economy even more complex. In this case, China needs to coordinate the relationship between Chinese characteristics and international practices and strike a balance between “bringing-in” and “going out”. We should focus on the convergence of domestic and foreign rules and standards, pilot the integration of rules in specific regions, lay emphasis on the spillover and interaction of great power of great powers' policies, and pay attention to the security mechanism and infrastructure construction related to financial openness.


Guan Tao delivered a speech titled “China’s Experience on Exchange Rate Choice and Currency Internationalization”. Guan pointed out that the 14th Five-Year Plan clearly proposes establishing a new system for higher-level open economy and improving the opening-up security system. One of the important aspects is to promote the internationalization of RMB in a prudent manner, adhere to market-driven operation and independent choice of enterprises, and create a new type of mutually beneficial cooperative relationship based on the free use of RMB. China shifted to a neutral exchange rate policy and regulatory police in 2018. Since then, the internationalization of RMB has generally progressed steadily, the exchange rate regulation mechanisms have been optimized, and the risk-neutral awareness of market participants has been strengthened. In the future, we should continue to deepen the marketization reform of the RMB exchange rate in the following three aspects: first, further improve the RMB central parity formation mechanism and enhance the representativeness of the central parity; second, vigorously develop the domestic foreign exchange market by diversifying trading products, expanding trading entities and relaxing trading restrictions; third, manage the relationship between financial openness and exchange rate choice from an institutional perspective, and choose the right time and way to provide legal guarantee for the central bank to exit from regular intervention on foreign exchange from the perspective of opening up based on institutions. Generally speaking, to promote a high level of financial openness, it is important to expand the institution-based opening-up and improve the opening-up security system. We should respect the market and the law, improve exchange rate regulation, develop the foreign exchange market and rationalize the relationship between supply and demand. In addition, we also need to give clear guidance to expectations, continuously improve prudent macro management, strengthen the risk-neutral awareness of the market, control risks associated with currency mismatches and exchange rate exposure, and improve our ability to maintain national economic and financial security while opening up to the outside world.


The thesis presentation session was held in the afternoon, which is consist of four parallel forums. More than 30 experts and scholars from Renmin University of China, Peking University, Tsinghua University, Central University of Finance and Economics, Sun Yat-sen University, Chinese Academy of Social Sciences, and other universities and research institutions have attended this session. The expert presentation focuses on four themes: “International Financial Market and Risk Prevention”, “the Internationalization of RMB and Cross-border Capital Flows”, “Digital Finance and High-quality Development”, and “Economic Opening and Corporate Investment” .