context: With hefty tariffs dealing a critical blow on PRC–US trade in goods, Washington is reportedly mulling more restrictions targeting PRC investments, capital markets and currency, echoing PRC experts Sun Lipeng 孙立鹏 and Liu Yuanchun 刘元春 warnings of trade war spillover effects. Some experts advise Beijing to step up RMB internationalisation. But challenges remain, not least in building relevant financial infrastructures, boosting market confidence and maintaining exchange rate stability.
Against US reciprocal tariffs and trade restrictions, Zhang Ming 张明 Chinese Academy of Social Sciences Institute of Finance deputy director shares his policy recommendations for the PRC
- be more conscious of the deterioration of the international economic and trade environment in the foreseeable future
- export firms and regions with a high concentration of export businesses need to be mentally prepared and should
- further diversify their export markets and globally distribute industries, ensuring that they are not overly reliant on a single market
- prepare for a larger-scale shift from exports to domestic sales
- export firms and regions with a high concentration of export businesses need to be mentally prepared and should
- steadfastly boost domestic demand, particularly by stimulating consumption
- implement more aggressive expansionary fiscal and monetary policies to offset the significant drop in net exports on total demand
- besides promptly implementing the expansion outlined in the 2025 Government Work Report, the Ministry of Finance should plan additional expansion for the second half of this year in advance
- especially by increasing the issuance of special government bonds
- spur the development of a unified domestic market
- break regional protectionism and administrative divisions to allow various production factors to freely flow nationwide
- thereby reducing domestic circulation costs
- break regional protectionism and administrative divisions to allow various production factors to freely flow nationwide
- enhance reforms in the domestic income distribution system, education, healthcare, pensions and housing
- enable middle and low-income families with higher marginal consumption to earn more income
- ensure that the middle class with strong precautionary savings motives can confidently consume
- as the US increasingly embrace protectionism, Beijing should shoulder more responsibilities in promoting economic and financial globalisation
- maintain good relationships with countries outside the US
- promote free trade and investment
- particularly enhance cooperation with European countries by reinitiating negotiations on free trade zones and bilateral investment agreements
- with the potential blow to the US dollar's international reserve status due to the Trump administration's policies, Beijing should promote RMB internationalisation through a new three-pronged strategy
- increase the RMB's role as a pricing and settlement currency for global commodities
- offer high-quality RMB-denominated assets to foreign investors (such as PRC government bonds)
- accelerate the development and promotion of international RMB clearing and settlement mechanisms (such as the cross-border interbank payment system and digital currency bridges)