A view of the PBC building in Beijing Photo: VCG

China's dual-circulation economic strategy should be expanded to stimulate market vitality and enhance innovation capacity, as the nation faces more global uncertainties due to sporadic COVID-19 outbreaks and shifts of monetary policies in major economies, a senior official from the People's Bank of China (PBC) said.

Liu Guiping, vice governor of the PBC, the central bank, made the remarks at a forum on global asset management in Shanghai, noting that international uncertainties also stem from adjustments of global supply and industry chains and trends of anti-globalization and populism.

Liu's remarks came after the World Bank predicted the global economy will grow 4.1 percent in 2022, a downward revision of 0.2 percentage points from its previous forecast, due to soaring cases of the Delta and Omicron variants.

Amid high inflation rates in major economies, many countries, including the US and the UK, have increased interest rates or signaled that they will, so emerging countries face the risk of large-scale capital outflows. China will also face increasing pressure from the international financial market.

Liu noted that China should pursue more active global participation, while striving to set up a financial system compatible with the dual-circulation development paradigm. Financial authorities should promote the interconnection of financial infrastructure via reforms in interest and exchange rates, in a bid to expand financial cooperation under the Belt and Road Initiative, Liu said. 

The PBC official also said that China needs a more innovative financial system, especially taking advantage of the capital market to address the financing needs of key technologies, so as to create a sound innovation ecosystem and promote positive interaction among the sectors of technology, industry and finance.

In response to international uncertainties, Liu said that China should set up services and financial products that will raise both urban and rural incomes, as well as a consumption upgrading to enhance domestic consumption.

According to Liu, the financial sector should continue to address the financing problems faced by small- and micro-sized enterprises, helping the private economy play a bigger role in stabilizing growth and employment.

Liu said that China should enhance financial policies to support rural revitalization and ensure food security.