RMB internationalization must be urged
Updated: 2006-07-01 09:51
The article, written by Li Daokui, head of the Center for China in the World
Economy with the prestigious Tsinghua University, said the status of Renminbi is
completely out of proportion with the Chinese economy, which is now the fourth
biggest in the world.
All economies bigger than China had an internationalized currency, he said.
"If Chinese enterprises and government could issue RMB-denominated bonds in
the international market, then even if the exchange rate fluctuates, Chinese
enterprises and the government would not need to worry about a crisis of
international payments.... This is the biggest benefit for a developing country
to have a hard currency," the article said.
An internationalized RMB would also free Chinese enterprises from exchange
rate risks in international trade, because their costs and sales revenue would
be both calculated in RMB, Li said.
The article said the ongoing appreciation of the RMB yuan provided China with
a good opportunity to promote RMB as a hard currency by issuing yuan-denominated
bonds on the international market.