China and the United States are strengthening financial cooperation through the China-US Financial Working Group, a positive and essential step toward preventing global financial crises and stabilizing the fragile global economy, experts said.
They made the comments after the China-US Financial Working Group held its fourth meeting in Washington on Tuesday. The meeting was co-chaired by Xuan Changneng, deputy governor of the People's Bank of China, and Brent Neiman, deputy secretary of the US Treasury Department, which was also attended by financial regulators.
The PBOC, China's central bank, said on Wednesday that the two sides had “professional, pragmatic, open and constructive” discussions on issues such as monetary policy and financial stability, financial supervision cooperation, institutional arrangements in financial markets, cross-border payments, etc. Data, sustainable Finance, anti-money laundering measures, countering terrorist financing and financial infrastructure.
The working group was founded by both sides in September to strengthen communication on financial issues.
According to the PBOC, US Treasury Secretary Janet Yellen met with the Chinese delegation and both sides agreed to continue communication.
The meeting came shortly after Yellen's visit to China earlier this month, during which the two sides agreed to continue exchanges on financial stability, sustainable finance, anti-money laundering and other issues through the Financial Working Group.
Liu Ying, a researcher at the Chongyang Institute of Financial Studies of Renmin University of China, said the meeting is significant as it gives a positive signal that China-US economic and financial relations are steadily recovering.
Liu said: “There have been significant fluctuations in China-US relations in recent years. The fact that the two sides are continuously working together through the Financial Working Group shows that their bilateral relations are moving towards stabilization and recovery, reaching a certain level of stability and security for the global economy.”
The China-US meeting came at a time when global stock and bond markets are under pressure, as recent US inflation reports showed continued price pressure and Fed officials have suggested US monetary policy may remain restrictive for longer must.
Liu Chunsheng, associate professor at the School of International Trade and Economics of the Central University of Finance and Economics, said that in this context, it is particularly important for China and the US to strengthen exchanges on monetary policy and financial stability.
“This will help both sides better understand each other's monetary policy moves, enhance mutual trust and work together to deal with potential financial stress,” Liu said.
According to the U.S. Treasury Department, the two sides held a technical exchange in March to discuss each jurisdiction's approach to financial stability oversight and establish plans for financial stability technical exercises.
Liu, of Renmin University in China, said if the U.S. fails to cut interest rates, it could exacerbate global financial fragility by adding pressure from local currency devaluation and capital outflows to other economies. It could also perpetuate stress in the U.S. banking system and increase the vulnerability of the high U.S. national debt, she said.
Therefore, the world's two largest economies “must and must” strengthen communications for macroeconomic policy coordination, Liu said, adding that the U.S. side should keep China informed of its monetary policy decisions while the Chinese side contributes should that the US avoid implementing beggar-thy-neighbor monetary policy.
Also on Tuesday, the China-US Economic Working Group held its fourth meeting, where officials from both sides exchanged views on issues such as the macroeconomic situation of the two countries and the world, balanced growth and future communication arrangements, the ministry said on Wednesday.
China expressed concern about US trade and economic restrictions on China and provided further answers on the issue of production capacity, the ministry said.
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