Crossing this Chinese river needs building a large bridge

Visitors look at the art work by American artist Tony Oursler entitled 100 Yuan which features a projection of a Chinese renminbi note with a talking Mao Zedong at a gallery in Beijing, China. (Photo: AAP).

Author: Peter Drysdale, Editor, East Asia Forum

China’s approach to economic reform is commonly characterised by Deng Xiaoping’s metaphor of ‘crossing the river by feeling the stones’. This is the experimental approach to economic and social reform. It is typified by the successful implementation of the household responsibility system that saw the transformation of Chinese agriculture and the early liberalisation of trade and investment through the establishment of Special Economic Zones together with economic experimentation in Guangzhou. Read more…

The forces driving RMB internationalisation

A Chinese clerk counts renminbi banknotes at a bank in Xuchang city, Henan province, 8 December 2013. (Photo: AAP).

Author: Yu Yongding, CASS

When renminbi internationalisation was making rapid progress in 2011, some leading investment banks predicted that by the end of 2012 Hong Kong’s offshore RMB deposits would reach more than 1 trillion yuan, cross-border RMB trade settlement would surpass 3.7 trillion yuan, and RMB-denominated bonds and loans would grow to 700 billion yuan. These predictions were way off the mark. However, on the other hand, RMB trade settlement has maintained its growth momentum: Read more…

Financial scenarios for Asia and the world

Visitors look at jewellery displayed at a jewellery fair to attract Chinese consumers in Shanghai, China. (Source: AAP)

Author: Andrew Sheng, Fung Global Institute

The Asian century is a foregone conclusion, but no-one has clarified whether it will be good or bad for Asia.

The region has 60 per cent of the world’s population and, according to Asian Development Bank estimates, will probably be responsible for half of global GDP and financial assets by 2050. Asia is too big to ignore and too diverse to be able to predict how it will shape this century. Read more…

Experimenting with the Chinese currency

A Chinese clerk counts yuan bills at a bank in Suzhou city, southeast Chinas Jiangsu province on 31 December 2012. (Photo: AAP)

Author: Liu Dongmin, IWEP

After becoming the new Chinese leader, Xi Jinping chose Shenzhen as his first visit outside Beijing and made the Qianhai special economic zone his first stop in Shenzhen. This was a clear signal of Qianhai’s position at the forefront of further reform and opening in China. Read more…

Renminbi internationalisation and the international monetary system: a match made in heaven

This photo taken on 9 October 2011 shows pedestrians walking past a currency exchange outlet in Hong Kong with the rates (815/824) against the Chinese yuan posted in the window. China is resisting US demands to speed up yuan reforms and let its currency appreciate at a faster pace, even as it pursues a long-term goal of making the unit more widely used overseas, analysts say. (Photo: AAP)

Author: Sourabh Gupta, Samuels International

On 2 November, on the sidelines of the G20 leaders meeting in Cannes, Zhang Tao, director general of the international department of the People’s Bank of China (PBoC), averred that China’s foreign exchange management strategy was based on ‘the principle of safety, liquidity and adding value’.

Given the US$271 billion in reserve losses presumed to have accrued during the 2003-2010 period as a result of the US dollar’s depreciation, this notion of ‘safety’ appears to be a rather elastic one. Read more…

The renminbi’s rise as an international currency: historical precedents

An elderly man walks past a poster advertising the renminbi (RMB) currency (Chinese yuan) in Hong Kong on 18 August 2011. (Photo: AAP)

Author: Jeffrey Frankel, Harvard University

All of a sudden, the Chinese renminbi is being touted as the next big international currency.

It has begun to internationalise along a number of dimensions in the last year or two: an RMB-denominated bond market has grown rapidly in Hong Kong, as well as a market in RMB-denominated bank deposits. Read more…

China moves slowly to internationalise the renminbi

The idea of the Chinese RMB as a reserve currency is becoming increasingly popular both in China and abroad. (Photo: AAP)

Author: Wang Yong, Peking University

For those interested in the internationalisation of China’s national currency, the renminbi, and hence anyone interested in the future of the global currency system, Vice Premier Li Keqiang’s recent visit to Hong Kong was an important event.

The Vice Premier announced on 17 August 2011 the central government’s ‘Six Measures’ to support Hong Kong’s economic development — a move welcomed by Chinese media and businesses. The measures include a quota of RMB20 billion (US$3 billion) for renminbi Qualified Foreign Institutional Investors (RQFIIs) to invest in mainland China’s RMB-denominated securities market; allowing mainland Chinese investors to conduct business in the Hong Kong Stock Exchange’s exchange-traded funds; and issuing RMB20 billion in RMB-denominated bonds in Hong Kong. Read more…