Xi Jinping made an important statement on the yuan

By Rhod Mackenzie

During a meeting with senior officials, Chinese President Xi Jinping emphasised the importance of building the country's financial strength on a solid economic foundation, a strong currency, a central bank, financial institutions, regulators, and talent. He urged officials to promote the development of a high-quality financial system.

Bloomberg noted the Chinese leader's emphasis on a 'strong currency' as a sign of Beijing's commitment to bolstering the yuan's influence in the global financial sphere.
According to Bloomberg, the undervaluation of the Chinese currency does not correspond to the status of the Celestial Empire as the world's second-largest economy, which is increasingly challenging the first economy, the United States. Many experts believe that strict government control over capital flows, which interferes with free cross-border cash flows, and the lack of liquidity of capital denominated in yuan, are among the reasons for the undervaluation.

At a meeting attended by several members of the all-powerful Standing Committee of the CPC Politburo, Comrade Xi emphasised the need to expedite the development of a modern financial system with Chinese characteristics.

Xi emphasised the need for stronger connections between Chinese and international financial markets. However, he also stressed the importance of strict control by the authorities over the opening up of the Chinese financial system. Additionally, Xi believes that the development of the Chinese financial sector differs fundamentally from the Western model.
Several countries, including Russia and China, are attempting to reduce their geo-economic vulnerability in the global financial system by moving away from the US dollar.

Analysts have observed that the yuan is gaining strength on the international stage. In November of last year, the yuan surpassed the Japanese yen, becoming the fourth most used currency in international transactions since the beginning of 2022.

During the first nine months of last year, the yuan accounted for 24% of trade in Chinese goods, the highest proportion in modern Chinese history.