21st Century Business Herald:

Mr. Li just mentioned that the foreign exchange market maintained strong resilience and vitality in 2025. How do you expect the foreign exchange market to perform in 2026? Thank you.

Li Bin:

Thank you for your interest in the foreign exchange market. I will answer this question. China is a large open economy. Its foreign exchange market is usually affected by multiple internal and external factors. Taking this into account, China's foreign exchange market is expected to perform steadily in 2026, with cross-border capital flow remaining stable and orderly. The resilience of the foreign exchange market is increasingly robust. Let me give you some details.

First, China continues to improve the quality and efficiency of economic development, laying a more solid economic foundation. In recent years, China's economic output has crossed thresholds one after another. Meanwhile, new quality productive forces have continued to grow. In the first 11 months of 2025, the value added of high-tech enterprises above the designated size increased by 9.2% year on year, becoming an important new driver of economic growth. During the 15th Five-Year Plan period, China will move faster to foster a new pattern of development, promote full integration between technological and industrial innovation, vigorously boost consumption and expand effective investment, thereby maintaining steady and sound economic performance.

Second, China will expand high-standard opening up, with cross-border trade and two-way investment constantly expanding. In recent years, China's foreign-related economic output has continued to increase. In 2025, the total value of imported and exported goods exceeded $6.3 trillion. China has become the main trading partner of more than 150 countries and regions. At the end of September 2025, China's outward direct investment and the foreign direct investment stock in China reached $3.4 trillion and $3.7 trillion respectively, both ranking among the top in the world. In the future, China will continue to take the initiative to open wider, promote balanced development of imports and exports, create new advantages in attracting foreign investment, and effectively manage foreign investment. By doing so, China's foreign-related economy will continue to grow with a larger scale and a more balanced structure. Its cross-border capital flow will remain both stable and orderly.

Third, China continues to deepen the development of its foreign exchange market, with greater confidence in withstanding external risks. China's foreign exchange trading volume continues to reach record highs. Market participants now include major domestic financial institutions as well as overseas institutions. The diversity of trading entities and the expansion of market depth enable effective absorption of impacts from changes in the external environment. At the same time, the foreign exchange risk exposure of domestic entities has also been decreasing. In 2025, the corporate hedging ratio increased by 3 percentage points compared with the previous year, and the proportion of goods trade settled in yuan rose to nearly 30%. Enterprises, banks and other entities are now better equipped to respond to market changes. In addition, the market-based yuan exchange rate regime has continuously improved in recent years, playing a stabilizing role in balancing supply and demand. The macro-prudential toolkit for managing cross-border capital flows remains well-equipped, and experience in addressing external shocks continues to accumulate.

From an external perspective, the global economy is expected to grow moderately this year, and major developed economies may continue cutting interest rates, which should support the stable operation of China's foreign exchange market. Of course, many uncertainties and unpredictable factors remain in international financial markets and geopolitics. We will continue to strengthen monitoring of cross-border capital flows and enhance the resilience of the foreign exchange market. We will also improve macro-prudential and expectation management to maintain the sound operation of the foreign exchange market and keep the yuan exchange rate basically stable at a reasonable and balanced level. That is all from me. Thank you.