(Yicai Global) June 14 -- Central banks around the world should seek permanent cures to trade issues instead of resorting to expansionary monetary policies, according to the former governor of the People's Bank of China. 

Competitive devaluation would disrupt the financial order, which would benefit no one, Zhou Xiaochuan told Yicai Global at a Lujiazui Forum in Shanghai today. The Chinese yuan will go toward internationalization from its distorted limitations in the past, he added. 

If the global trade frictions drag on, the consensus that the G20 reached in Shanghai about preventing competitive devaluation may be harmed, he added. 

Trade talks are essential for restoring global confidence in trade, Zhou said. The international Financial Stability Board should study the issue and send a stable signal to the market at the G20 Osaka summit later this month, he added. 

Zhou defended the competitiveness of Chinese firms. The iron curtain of tariff threats has no future and it cannot prevent the technological progress of emerging markets, Zhou said.

China had scarce technical talent and poor conditions for research and development in its early days of reform and opening-up but it has improved the related policies with tax breaks and this will generate increasingly promising results, he added. 

China lacked venture capital and financing support for technology development for a long time, as the equity market was weak, but the nation has learned how to transform, Zhou said, adding that a further opening-up of the financial sector is very important.

Foreign investment is still small-scale in banking, insurance and capital markets but China's widening financial market has great potential, Zhou concluded.

Editor: Dou Shicong, Emmi Laine