SHANGHAI/FRANKFURT, Oct. 21 (Xinhua) -- The European Central Bank (ECB) and the People's Bank of China (PBOC) maintain regular multi-channel exchanges, and deeper mutual understanding yields shared benefits amid extensive trade, technology and financial ties linking China and the euro area, according to a member of the ECB's executive board.
China and Europe are advancing financial connectivity through institutionalized central bank dialogue. The first annual governors' meeting between the PBOC and the ECB, held in Beijing in June 2025, established a high-level communication channel.
"We interact with the People's Bank of China in different venues," Philip R. Lane, member of the ECB's Executive Board, told Xinhua in an interview in Shanghai. "The more we understand one another, the more it benefits everyone."
Together with renewed bilateral currency swap facilities and joint work on green finance standards, this institutional mechanism underpins deeper China-Europe financial ties, while both sides demonstrate leadership in developing sustainable finance frameworks for global markets.
On green finance, Lane said both the ECB and the PBOC recognize the importance of the green transition and have led the Network for Greening the Financial System. "The PBOC and the ECB are leaders in that global effort," he said, describing their joint role as critical in adapting the financial system to the green transition and the risks posed by extreme weather events.
For cross-border payments, Lane said the G20 roadmap is the best way to advance global coordination. As issuers of two of the world's major currencies, China and the euro area stand to gain greatly from steady exchanges under the G20. Regarding China's Cross-Border Interbank Payment System, he said it is natural for China to develop local-currency settlement facilities given its rising weight in global trade.
Lane, who attended the 2026 Bund Summit in Shanghai, said there is substantial interest in Europe in using China's open-weight AI models. He also expressed appreciation for how China is exploring ways to leverage AI within a regulated framework to manage downside risks.
China's gross domestic product grew 4.5 percent year-on-year in the third quarter of 2026, according to data released by the National Bureau of Statistics. Lane said China's economy is an important driver of the world economy. Its strong export performance creates positive spillovers: European consumers enjoy greater product variety with lower prices, and European manufacturers gain access to more intermediate goods. "More domestic consumption would benefit China and the euro area," he added.
Through pragmatic and productive discussions, China and the European Union have shown a willingness to deepen cooperation and work toward a stable, more balanced economic and trade relationship. The two sides agreed to continue discussing the possibility of lowering tariffs on certain goods under WTO rules and reached an understanding on the trade of hybrid vehicles consistent with WTO rules.
Recent agreements aim to adjust the pace of trade flows, enabling the European automotive sector to adjust "in a more gradual manner," Lane remarked. He voiced optimism over the outlook for China-EU trade and investment ties. "China's growing wealth also allows its savings to finance European investment, representing a financial spillover," he said.
Underpinned by renewable energy expansion that lessens fossil fuel dependence, government fiscal backing, and AI-fuelled investment and manufacturing improvements, the euro area economy has proved more resilient than expected, prompting the ECB to raise its 2026 and 2027 growth forecasts in September.
With energy prices and inflation rising sharply due to the conflict in the Middle East, Lane said policymakers aim to guide inflation back toward the 2-percent target while avoiding derailing economic expansion. He added the ECB has implemented two rate hikes and will not lock in future moves in advance. ■
