Zhou Xiaochuan Says Climate, Payments, Debt and Imbalances Still Need Global Cooperation

International coordination under strain

Macroeconomic policy coordination has become more difficult as globalization deepens, but international cooperation remains essential in areas such as climate change, payment systems, debt issues and global imbalances, former People’s Bank of China Governor Zhou Xiaochuan said at the Boao Forum for Asia.

Zhou said regional conflicts have become more frequent, tensions among major countries are rising, and governments are focusing more on domestic interests than on international coordination. Even so, he said coordination remains an important issue despite becoming more challenging than before.

Climate and payments

On climate change, Zhou noted that although the United States has withdrawn from the Paris Agreement, most countries in Europe and Asia, including Japan, South Korea and members of the Association of Southeast Asian Nations, are still actively advancing regional emissions-reduction alliances.

On payment systems, he said cross-border payments and digital currencies are part of financial infrastructure and should not depend only on commercial banks or private platforms. He added that some ASEAN countries, including Singapore, have made significant progress in cross-border payments, with tourists’ spending, online merchants and small- and medium-sized trade settlements expected to benefit from seamless connectivity.

Debt and global imbalances

Zhou said some developing countries continue to face heavy debt pressure after the Covid-19 pandemic. He said the G20’s Debt Service Suspension Initiative launched in 2020, along with the follow-up sovereign debt restructuring framework, has helped ease the strain to some extent, but has not fundamentally solved the problem.

He also said the United States faces global imbalance issues but has chosen to use tax measures rather than exchange-rate mechanisms or similar tools to address them. Because taxation is a thorny issue, Zhou said the International Monetary Fund’s framework measures should be used to tackle imbalances.

Exchange-rate stability in Asia

During a Boao Forum dialogue session, Zhou also explained why Asian economies tend to prefer exchange-rate stability. He said this partly reflects the historical inertia of planned economies, which often judge exchange-rate rationality through purchasing power parity.

He added that sharp exchange-rate swings can trigger unexpected capital flows, magnify economic imbalances and place greater pressure on policymakers.