Addressing the 2026 Tsinghua PBCSF Chief Economists Forum held at Tsinghua University under the theme "2026 China and the World Economy Review and Outlook: Global Rebalancing and International Monetary System Restructuring," Ju Jiandong, Chair Professor at the PBC School of Finance, Tsinghua University, and Director of the Center for International Finance and Economic Research (CIFER), delivered a keynote speech outlining his latest policy proposal.

Ju Jiandong argued that China's economy currently confronts three structural contradictions requiring urgent resolution. The first is global imbalance. China's manufacturing surplus has consistently expanded, reaching $1.2 trillion in 2025, largely mirrored by the US trade deficit. He emphasized this does not stem from Chinese subsidies or exchange rate distortions but emerges naturally from Ricardian specialization—China focusing on manufacturing while the US specializes in finance, with each side leveraging its comparative advantages.

The second contradiction is domestic supply-demand imbalance, primarily insufficient domestic demand. This structural issue arises as China transitions from an industrialization era toward a welfare-oriented model, yet pension and basic service protections for low-income households remain underdeveloped. Rural and urban residents currently receive approximately 249 yuan in monthly pensions; raising this to 1,000 yuan would require fiscal expenditure of roughly 1.6 trillion yuan. As manufacturing supply keeps expanding, surplus products increasingly depend on export markets.

The third contradiction is the central-local fiscal imbalance. The central government retains fiscal room for maneuver, but local governments face funding difficulties driven by falling land concession revenues. To address all three challenges simultaneously, Ju proposed issuing 10 trillion yuan in offshore sovereign bonds, achieving what he calls a "triple rebalancing" effect.

Explaining the mechanism, Ju detailed how the 10 trillion yuan bond issuance works across three dimensions. First, China's $1.2 trillion trade surplus currently converts into increased net foreign assets; if fully allocated to US Treasuries, US external debt correspondingly rises. By leveraging these net foreign assets as collateral to issue yuan-denominated sovereign bonds offshore, China's external liabilities increase by 10 trillion yuan, rebalancing its external asset-liability structure.

Second, regarding deployment of the 10 trillion yuan raised, Ju outlined a specific allocation plan: 2 trillion yuan to raise per capita pension payments for urban and rural residents to 1,000 yuan, 2 trillion yuan to replace local government debt, 4 trillion yuan for new local government investment, and 4 trillion yuan for additional central government investment, including 2 trillion yuan for industrial investment and 2 trillion yuan for new energy development. Higher pension payments would stimulate consumption and investment while lowering savings and raising investment, thereby boosting domestic demand, reducing exports, increasing imports, and achieving external rebalancing.

Third, regarding central-local fiscal rebalancing, 4 trillion yuan from the bond proceeds would replace local government debt, leveraging the central government's robust fiscal capacity to relieve local debt pressure and support local fiscal expenditure and economic growth.

In conclusion, Ju emphasized the proposal aims to comprehensively boost consumption and investment, channel international imbalances back into domestic income and consumption through offshore yuan bond issuance, and release fiscal space for local governments, providing new momentum for stable, long-term economic development. Additionally, such issuance would accelerate RMB internationalization and provide safe assets to the global market. He noted that US Treasuries, serving as the world's most important safe haven asset, are approaching their capacity ceiling, making RMB internationalization timely and opportune. While China's economic rebalancing represents a long-term institutional reform facing significant resistance and difficulty, RMB bond internationalization offers an approximate improvement. This policy measure not only facilitates China's triple rebalancing but also contributes to RMB internationalization and the reshaping of the international monetary system.