Zhang Xiaohui: Theoretical innovation should start from practical problems and serve practical polic
On May 14th, the 2022 Tsinghua PBC School of Finance Chief Economist Forum, hosted by Tsinghua University's PBC School of Finance and organized by the Center for International Finance and Economics Research (CIFER) of Tsinghua University's National Institute of Financial Research, was successfully held. The forum, themed "2022 in Turmoil: Global and Chinese Economic and Policy Outlook," invited 21 chief economists and leading scholars from renowned global institutions to engage in in-depth discussions on four roundtable topics. The forum was broadcast live in both Chinese and English, and shared globally online.Zhang Xiaohui, Dean of the PBC School of Finance at Tsinghua University, attended the meeting and delivered a speech.Zhang Xiaohui pointed out that the times call for new macroeconomic theories and new monetary economic theories. Theoretical innovation based on practical problems and theoretical innovation that better serves practical policies are the goals the academy should strive for in the next decade. She hoped that the Chief Economist Forum could analyze and forecast economic, financial, technological trends and policies in China and the world, providing more opportunities for intellectual exchange and fruitful results.
The following is a transcript of the speech:
The picture shows Zhang Xiaohui.
Address at the 2022 Tsinghua PBC School of Finance Chief Economist Forum
(May 14, 2022)
Zhang Xiaohui, Dean of Tsinghua University PBC School of Finance
Respected President Wang Xiqin, Dean Lin Yifu, Mayor Huang Qifan, Mr. Dalio, distinguished leaders, guests, economists, teachers, students, and friends:
Good morning, everyone! First of all, please allow me, on behalf of all the faculty and students of Tsinghua University's PBC School of Finance, to extend a warm welcome and heartfelt thanks to all the leaders, guests, and friends watching the forum online! The Tsinghua PBC School of Finance Chief Economist Forum is held annually in Beijing in late spring and early summer. The forum focuses on a global perspective, promotes multi-dimensional exchanges, and brings together chief economists and leading scholars from renowned domestic and international institutions. It serves as an important platform for policy, market, and academic discussions, and is a crucial forum for macroeconomic policy research and exchange between China and the world. The first forum was held on the Tsinghua University campus in 2019. In 2021, the forum was held online and streamed live across the entire network, attracting over ten million viewers in real time, making it the largest and highest-level chief economist forum in China. This year marks the third forum. Facing uncertainties such as the resurgence of the pandemic, the Russia-Ukraine conflict, and high global inflation,The forum chose "A Tumultuous 2022: Global and Chinese Economic Policy Outlook" as its theme for this year.
Today's forum has welcomed many of the most outstanding economists who study China's and the world's economic and financial policies. Like my friends watching on the screen, I look forward to hearing their profound insights into the development trends of China and the world economy.This year also marks the 10th anniversary of the founding of Tsinghua University's PBC School of Finance. PBC School of Finance has been operating for 41 years.In March 2012, the People's Bank of China and Tsinghua University joined forces to establish the Tsinghua University PBC School of Finance, based on the Graduate School of the Financial Research Institute of the People's Bank of China, which was founded in 1981 in Wudaokou, Haidian District, Beijing. Ten years ago, at the inception of the PBC School of Finance, we set our sights on "rooting ourselves in China and building a world-class finance school." While the success of a school is not solely judged by the number of papers published, the publication of internationally renowned papers is still an important indicator of the school's academic level. As of the end of 2021, the school's full-time professors had published an average of more than 7 A+ level papers in top international journals, leading other finance departments in Asia. Since its establishment, the school has published or had accepted 311 high-level academic papers in top domestic and international academic journals, demonstrating a high level of both quantity and quality. It can be said that the initial goal of becoming the best finance school in Asia has been largely achieved.
In the past two years, the academy has been continuously discussing how to continue to uphold theoretical and practical innovation, base itself on China's financial practice, conduct research on Chinese issues, develop and improve the economic and financial theoretical framework that supports and influences decision-making in a timely manner, and greatly enhance its ability to serve major national decisions through financial research.We believe that theoretical research must start from practical problems and policies, combining theory with practice and policy with academia. The PBC School of Finance at Tsinghua University is itself a product of the collaboration between the People's Bank of China and Tsinghua University; its predecessor was the Graduate School of the People's Bank of China. As early as the 1980s, when the Graduate School was established, we not only invited the nation's top economics and finance professors to impart the most classic and cutting-edge economic and financial theories, but also invited renowned industry experts and policy researchers to explain the latest developments and policy trends in the field to our students. It can be said that both the early Graduate School of the People's Bank of China and the current Tsinghua PBC School of Finance have always been an open platform. Faculty and students have consistently adhered to a problem-oriented and practice-oriented approach, conducting research around China's monetary policy and macroeconomic issues, striving to explore Chinese experiences, and aiming for breakthroughs in the fields of economics and finance.Starting from practical problems inevitably requires theoretical breakthroughs.
Following the 2008 global financial crisis, central banks in developed economies, including the Federal Reserve, launched unconventional monetary policies such as quantitative easing to support the recovery of the real economy by increasing liquidity in the financial system. According to then-Fed Chairman Ben Bernanke, quantitative easing and other unconventional monetary policies broke with all classical monetary economics theories. However, what we have seen is that prolonged ultra-low interest rates have failed to boost long-term productivity; instead, they have encouraged short-term stimulus and fueled asset bubbles. In recent years, the recurring COVID-19 pandemic has dealt an unprecedented blow to global industrial and supply chains. Coupled with the Russia-Ukraine conflict, rising inflation and interest rates have significantly increased volatility in international financial markets, fueling risk aversion and adding new uncertainties to the global economy. Both monetary economics theory and the current international monetary system face unprecedented contradictions, especially the abuse of economic and financial sanctions during geopolitical conflicts, which raises serious questions about whether the current international monetary system can continue to provide global public goods. Since the outbreak of the pandemic, China has refrained from massive monetary easing, instead adopting a structural counter-cyclical approach to monetary policy. Credit funds have been directly channeled to small and medium-sized enterprises (SMEs) and technology-based companies, providing targeted and precise support to key sectors such as manufacturing. With the total money supply largely matching economic demand, this has both revitalized micro-entities, enhanced overall innovation capabilities, stabilized industrial and supply chains, and stabilized the macroeconomy. However, explaining why structural monetary policy has played a crucial role in this extraordinary period is a challenge that classical monetary economics cannot adequately address, urgently requiring theoretical breakthroughs and innovations.
The times call for new macroeconomic theories and new monetary economic theories. Theoretical innovation that stems from practical problems and better serves practical policy should likely be the goal that the PBC School of Finance should strive for in the next decade.。I am particularly pleased to see so many renowned scholars gathered at the Tsinghua PBC School of Finance Chief Economist Forum today to analyze and forecast economic, financial, technological trends, and policies in China and the world. Such academic discussions will undoubtedly greatly benefit the research capabilities of the PBC School of Finance. Finally, I would like to thank all the guests for their continued support of the Tsinghua University PBC School of Finance and the Tsinghua PBC School of Finance Chief Economist Forum, and wish this forum a complete success. Thank you!