(Yicai Global) May 27 -- The US cannot solve problems by escalating trade frictions with China, because even if the US hikes tariffs to the extreme, China's economy and finance market will only see a limited effect, Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, said in a keynote speech at a forum in Beijing over the weekend.

China will continue to intensify reforms of the yuan exchange rate formation mechanism and unswervingly further open-up the financial market though the external environment has changed, Guo stressed at the Tsinghua PBCSF Global Finance Forum at Tsinghua University.

The recent short-term fluctuations of the yuan exchange rate are normal, he noted, saying that China's economic fundamentals determine that the yuan will not constantly depreciate.

China maintains the biggest driving force for the world's economic growth, and the yuan market exchange rate is approaching purchasing power parity as the quality of economic development is improving, Guo stated, adding the yuan short sellers will necessarily suffer great losses.

China especially welcomes foreign investors with a good reputation, credit history and specialty in risk control, credit rating, consumer finance endowment insurance and health insurance to enter China with innovative products, Guo noted.

Editor: William Clegg