MNI BRIEF: Global Green Transition To Boost Yuan - PBOC Official

The worldwide green and low-carbon transition will boost the global use of the yuan thanks to the expansion of related trade and investment, and China’s monetary and fiscal policymakers must provide diverse financing tools to meet significant funding demand, said Wang Xin, director at Research Bureau of People's Bank of China, at the 2024 Bund Summit in Shanghai over the weekend.

China’s advantages in areas such as photovoltaics, electric vehicles, and energy storage batteries will drive the yuan’s wider and deeper use in pricing and settlement, said Wang when introducing the latest 2024 Bund Summit Report on Green Finance. He suggested China should compete in the pricing power of critical minerals, carbon emission rights, electricity, and green finance markets to push the yuan's international use. (See MNI INTERVIEW2: China Green Transition To Boost Manufacturing)

There is an urgent need to develop the capital market to leverage social capital for the economic green transition, he pointed out, warning the low-carbon transition may lead to inflationary pressure and impact consumption in the short term, considering it will restrain exports of high-carbon products in developing countries, raise carbon prices and pass part costs of the transition on to consumers.