From a new book from Cambridge:
In this freshly published volume, Yin-Wong Cheung
” talks about the worldwide role of the RMB. After recapitulating its financial and trade growth experiences, we state Chinas evolving exchange rate policy in the post-reform era, evaluate the debate over whether the RMB is overvalued or underestimated, present Chinas policies to globalize the RMB, explain oﬀshore RMB trading, evaluate the current international status of the RMB, and go over geopolitical tensions in the last few years. Considering that 2009, the process of globalizing RMB has actually not been smooth sailing and has progressed rather unevenly gradually. Despite the strong performance in the early 2010s, the RMB is underrepresented in the international market and its worldwide function does not match Chinas financial may. The course of RMB internationalization is aﬀected by both Chinas economic performance andgeopolitical factors.”
Concerning RMB internationalization, Cheung notes:
After reaching the 2015 high point, the procedure of globalizing the RMB has advanced rather unevenly and, in some areas, has actually even reversed. The modification took place in parallel with Chinas increased (administrative) foreign exchange management, ﬁnancial deleveraging policies, and the concurrent increase in global uncertainty and geopolitical stress that have decreased worldwide need for RMB-denominated properties. Further, the eruption of the China-US trade disagreement and the subsequent change in the view towards China do not prefer the international use of the RMB. The 2020 coronavirus pandemic provided China with another opportunity to restore the momentum of globalizing its currency. The pandemic impacted China hard in the ﬁrst half of 2020; nevertheless, with its efficient public health control procedures, China showed its financial resilience in late 2020 and 2021.32 This quick economic healing and the RMBs stability have improved the beauty of RMB-denominated properties to international financiers and enhanced the global use of the RMB.
In the following subsections, we recount Chinas main policies for promo of RMB internationalization and discuss its outsourcing practice– the overseas RMB trading. Chinas RMB internationalization program covers and engages with a vast array of topics. While a complete protection of RMB international-ization is beyond the scope of this research study, we provide a summary.
Source: Cheung (2022 ).
Any scholar wanting to follow Chinas policies regarding its exchange rate should read this volume.
My ideas on previous essays on Chinas currency include Eswar Prasads Gaining Currency (2015 ), Paulo Subacchis The Peoples Money (2017 ). My take on the RMBs status relative to the dollar existed at a current Board-NY Fed conference.
If the authors name sounds familiar, he (together with myself and Eiji Fujii) coauthored The Economic Integration of Greater China (2007) (were dealing with an upgrade now), numerous deal with RMB misalignment (most recently, Cheung, Chinn and Xin, 2017), currency exchange rate forecast (most just recently Cheung, Chinn, Garcia Pascual, Zhang, 2019), and on Chinese imports and exports (Cheung, Chinn, Qian, 2015)
After recapitulating its financial and trade growth experiences, we recount Chinas progressing exchange rate policy in the post-reform era, evaluate the dispute over whether the RMB is overvalued or undervalued, present Chinas policies to globalize the RMB, explain oﬀshore RMB trading, examine the present international status of the RMB, and talk about geopolitical stress in the last couple of years. Despite the strong performance in the early 2010s, the RMB is underrepresented in the global market and its global role does not match Chinas economic might. The pandemic affected China hard in the ﬁrst half of 2020; however, with its reliable public health control steps, China demonstrated its economic strength in late 2020 and 2021.32 This quick economic healing and the RMBs stability have actually enhanced the appearance of RMB-denominated assets to worldwide financiers and boosted the worldwide use of the RMB.
In the following subsections, we recount Chinas primary policies for promotion of RMB internationalization and discuss its outsourcing practice– the offshore RMB trading.