It is not necessary to overly interpret the internationalization process of Chinese currency yuan or renminbi, which has still remained in an early phase, meanwhile it should neither be treated as a weapon of confrontation in international markets, a senior executive said Friday.
Speaking of the prospect of yuan’s internationalization, Hu Xiaolian, chairman of Export-Import Bank of China, a state-funded and state-owned policy bank, also former deputy governor of the People’s Bank of China (PBC), told the annual Lujiazui Forum on Friday that yuan’s basic feature is to serve the real economy as its main function. Its internationalization started in the process of China’s economic globalization, and market players have generated a demand for stable cross-border use.
The internationalization of yuan has been assigned with many connotations, Hu said, such as treating the fluctuation in yuan’s exchange rate as a “barometer” for its internationalization, treating yuan as an international safe-haven currency, and using digital yuan as a shortcut to the internationalization process, Hu elaborated, meanwhile stressing that yuan’s internationalization should not be considered as a weapon in international confrontation.
China will take prudent measures to advance the internationalization of yuan, according to the draft outline of the 14th Five-Year Plan (2021-25) for national economic and social development and the long-range objectives through the year 2035.
At the beginning of this year, renminbi became the second largest cross-border settlement currency in South China’s Guangdong Province, one of the country’s major manufacturing and export hub, and it surpassed the US dollar to become the largest cross-border settlement currency in the Guangdong-Hong Kong-Macao Greater Bay Area.
China’s cross-border renminbi settlement volume in 2020 exceeded 28 trillion yuan ($4.4 trillion), an increase of 44 percent on a yearly basis, according to a whitepaper released by the Bank of China in April.
“The internationalization of yuan is based in China… a natural and long-term process as the Chinese economy deeply participates in the global division of labor and the mutual benefit of international trade and investment,” Hu said, disapproving short-term speculative trading.
Different from the already-mature markets like crude oil and precious metal where renminbi came as a latecomer, the emerging green development could provide a brand-new opportunity for the Chinese currency to take a leading position instead of following others, according to her.
Photo: VCG
