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The United States and China have signed new agreements aimed at strengthening cooperation on financial stability, as announced by the People’s Bank of China (PBOC) on Monday. The agreements emerged from a recent meeting of the U.S.-China Financial Working Group, held in Shanghai on Thursday and Friday.
Brent Neiman, Deputy Under Secretary for International Finance at the U.S. Treasury Department, and Xuan Changneng, Deputy Governor of the PBOC, co-led the working group discussions. The meetings included representatives from key financial institutions such as the Federal Reserve, the U.S. Securities and Exchange Commission, the National Financial Regulatory Administration, and the China Securities Regulatory Commission.
The PBOC described the discussions as “professional, pragmatic, candid, and constructive,” covering critical topics such as capital markets, cross-border payments, and monetary policy. These discussions were particularly relevant in light of China’s recently concluded Third Plenary Meeting, which set the stage for further economic and financial reforms.
A significant outcome of the meeting was the exchange of contact lists for handling financial stress or risk events, a step designed to facilitate swift communication between the two countries during potential financial crises. Technical experts from both sides also reported on the resilience of each country’s systematically important banks and financial institutions, as well as the progress of climate risk stress testing.
The recent meetings come amid heightened volatility in China’s government bond market, which saw increased instability earlier this month following reports of PBOC intervention. However, PBOC Governor Pan Gongsheng stated on Thursday that financial risks, including those from local government debt, have since decreased.
Additionally, the U.S. and Chinese financial institutions held their first roundtable meeting under the working group framework, discussing opportunities for collaboration and how finance can support sustained growth.
The economic and financial working groups were initiated by U.S. Treasury Secretary Janet Yellen and Chinese Vice Premier He Lifeng in September 2023. The framework aims to foster regular communication between U.S. Treasury officials and their counterparts at the Ministry of Finance and the PBOC, strengthening bilateral financial cooperation.
The agreements and discussions mark a significant step in enhancing financial stability and collaboration between the world’s two largest economies.
