I have an article at China.org.cn on the risks and advantages of internationalisation of China’s currency, the RMB - including analysis of the positions being taken by some of China’s leading economists.
The article notes: ’So far China's policy has carried out a logical step by step RMB internationalization – it is aided by Hong Kong being available as an offshore base for RMB operations.
‘ • The percentage of China's trade conducted in RMB rose from 0.5 percent in the first quarter of 2009 to 7.0 percent, or $55.2 billion, in the first quarter of 2011.
‘ • A growing market for international RMB bonds has been created...
‘ • The first IPO in Hong Kong in RMB, by Hui Xian, raised $1.6 billion.
‘ • The value of RMB deposits in Hong Kong has risen to over $62 billion and is projected to reach $154 billion by the end of 2011.
‘ • China has allowed three foreign central banks – Hong Kong, Norway, and Malaysia – to hold RMB as part of their foreign exchange reserves. A big question for China will be how it responds to the same request that has been made by South Korea.’
The article notes: 'Such a... strategic issue has to be looked at from the point of view of the overall interests of China's economy. Not from the point of view of the desire of some people to make huge fortunes by methods that have done such damage to the US economy.'
The article can be found in full here.
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