The photo shows the 2024 Tsinghua PBCSF Global Finance Forum held in Hangzhou, East China's Zhejiang Province, on May 27, 2024. The two-day forum ended on Tuesday. Photo: Courtesy of event organizer

Editor's Note:

This year marks the 80th anniversary of the establishment of the Bretton Woods System, which anchored the value of the US dollar to gold and secured the dollar's status as the global reserve currency. However, in the face of a fragmented global economy, rising debt and a volatile global financial environment, there are growing calls for reforms of the current Bretton Woods system.

This week, the 2024 Tsinghua PBCSF Global Finance Forum took place in Hangzhou, capital of East China's Zhejiang Province. It invited globally renowned scholars to discuss how to reform and reconstruct an international monetary and financial system for all.

Global Times reporter Li Xuanmin (GT) interviewed Zhu Min (Zhu), founder of the Global Economic Governance 50 Forum, former deputy governor of China's central bank and former deputy managing director of the IMF, and Marc Uzan (Uzan), executive director of the Reinventing Bretton Woods Committee, on the sidelines of the forum. The two economists shared their insights on the global de-dollarization trend and China's role in the construction of a new global financial system.

Marc Uzan Photo: Tsinghua PBCSF Global Finance Forum

GT: How do you evaluate the globalization of the yuan? And in your perspective, what role would the yuan and other emerging market currencies play in the construction of a new financial system?

Uzan: If you look over the past 80 years, one of the main changes in the international monetary system was the emergence of a new reserve currency, the euro. The US dollar is the main reserve currency, but that doesn't mean that central banks around the world still treasure the dollar-denominated asset ecosystem.

I can clearly see the configuration of power that in the case of China, the yuan will become over the next two decades another major reserve currency because the weight of China as a major economy will be higher and higher. So there is a logic that the yuan will become more internationalized.

The question is how we are going to operate in a world where you have three such currencies: the US dollar, the euro and the yuan. If these three can work together and cooperate, you need an underpinning to have this coordination. And I believe that's why it's so important to reform the international financial system.

GT: We can see more countries including developing countries participate in the rebuilding of a new financial system. So what role do you foresee China will play in shaping it?

Uzan: Today, the world is very different from the world when I started my career 40 years ago. Forty years ago, it was about breaking emerging markets into the global economy, and we did face many financial crises.

Now, 40 years later, we are in a world that is becoming more complicated. We have two important points in the global economy. For the past 20 years, China has been a major beneficiary of globalization and the country carries more responsibility. Every country around the world looks at China, and China's contribution in terms of GDP growth for the global economy is more influential.

So with responsibility, you also need to provide global goods to the world and come up with initiatives. China in the past few years set up new institutions, like the Asian Infrastructure Investment Bank and New Development Bank. China also talked about having many swap lines with many countries.

Today, China plays a role in shaping global governance, but it doesn't want it to be biased. China wants to work with other countries to build a sound, fair and legitimate global financial architecture.

This is what I see as the role of China: it is about working together to make sure that the orchestra will play a good symphony.

This is a very critical moment, because no one is going to win in a world that is going to be more fragmented and where we are losing international cooperation. China cannot work by itself. We need the international community because we face many challenges.

Climate change is number one, and we want to make sure that we're not going to be in a world where the global economy is fragmented. We want to move away from this because we learned from history.

GT: Recently, global fund managers have been increasing their investment in Chinese assets. In your opinion, what are the reasons behind this? What is your evaluation of Chinese assets?

Uzan: China is now in a period of moving from quantity growth to quality growth. So what was the driver of China's growth for the past two decades is going to be replaced by the new driver of growth. There are challenges. One is how we are going to increase basic demand in China. Also, China's move to a new form of manufacturing is going to be driven more by innovation.

So this is a good moment to change the growth model. This reform is going to be not only in the interest of China, but also in the interest of the global economy.