News / Asia

    China Pushing for Yuan to be Global Currency

    Heda Bayron

    Business leaders have mixed views about how soon the Chinese currency might replace the dollar as the world’s dominant currency as Beijing promotes greater use of the yuan. Some say Beijing must carry out more reforms for that to happen.

    Even as the United States and other countries complain that China’s yuan is deliberately undervalued, Beijing is pushing to make its currency more internationally accepted, commensurate with its growing economic influence.

    Chinese officials say they want to make the yuan a global currency like the dollar. And President Hu Jintao told the Wall Street Journal this month, that the global financial system dominated by the dollar is a "a thing of the past”.

    "It’s one of the first times that a country has actively tried to promote its own currency as an international currency, most other currencies like that have had that role thrust upon it," said Robert Mundell, an economics professor at Columbia University in New York.

    But while many business leaders agree that the yuan, also called the renminbi, will eventually reach global stature, they say it is unlikely to replace the dollar anytime soon.

    "I don’t see in the short term the renminbi replacing the dollar," said John Peace, chairman of the British bank Standard Chartered. "What I do see the renminbi becoming as important as the dollar. But I don’t think this necessarily is measured in centuries, I think this can happen quite quickly."

    One reason some economists think the yuan will not quickly replace the dollar is that China strictly controls the flow of yuan outside the country.

    Foreign companies operating in China usually must convert yuan revenues to U.S. dollars before remitting the money to their headquarters. And those buying goods in China pay for them in dollars.

    Starting in 2009, however, China has gradually eased those controls. Trade settlement services in yuan are now being offered outside China. Large U.S. companies like McDonalds and Caterpillar have raised money by issuing yuan bonds in Hong Kong.

    But Victor Fung, chairman of Li & Fung, a major supplier to large U.S. retailers, is skeptical that large U.S. companies will start using the yuan.

    "Will people be conducting trade in renminbi, or willing to conduct trade in renminbi, to me is going to be the key issue," Fung said. "There, I’m less optimistic about the timing. If I’m a big U.S. retailer buying from China, my exposure is in U.S. dollars, I would love to continue to buy in U.S. dollars. What is my incentive to shift my Chinese purchases to renminbi? I think that’s the most fundamental issue that we want to address if you want to internationalize the renminbi in the short run."

    Levin Zhu, chief executive of China International Capital Corporation, and son of former Chinese Premier Zhu Rongji, says the question of how soon businesses will use the yuan for trade hinges on how easily they can exchange it with other currencies.

    "I think it should be convertible before it could be really internationalized," Zhu said.

    Fully convertible currencies, such as the dollar and the euro, can be changed into other currencies or gold at any time, without government restrictions.

    That is not now possible with the yuan. And convertibility has risks because such currencies can swing in value, and China has strongly resisted all pressure on it let the yuan rise in value. Doing so would make Chinese exports more expensive overseas, and economists and political analysts say Beijing does not want to do anything that could reduce jobs.

    Still, Chinese authorities are encouraging more yuan-denominated financial products to attract international investors. Reports say Hong Kong’s stock market may see a yuan-denominated initial public offering this year.

    Zhang Jianjun is the president of the People’s Bank of China Shenzhen Central sub-branch. He says Beijing plans more such measures.

    Zhang says the central bank is studying the use of the yuan in foreign direct investments in China and overseas investments by Chinese companies, which is currently being tested.

    He says if the yuan is to be accepted like other major currencies, it must be allowed to flow both ways.

    You May Like

    Top US General: Turkish Media Report ‘Absurd'

    General Dunford rejects ‘irresponsible' claims of coup involvement by former four-star Army General Campbell, who led NATO forces in Afghanistan before retiring earlier this year

    Video Saving Ethiopian Children Thought to Be Cursed

    'Omo Child' looks at efforts of one African man to stop killings of ‘mingi’ children

    Protests Over Western Troops Threaten Libyan 'Unity' Government

    Fears mount that Islamist foes of ‘unity' government plan to declare a revolutionaries' council in Tripoli

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    London’s Financial Crown at Risk as Rivals Eye Brexit Opportunitiesi
    X
    VOA News
    July 25, 2016 5:09 PM
    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Calm the Waters: US Doubles Down Diplomatic Efforts in ASEAN Meetings

    The United States is redoubling diplomatic efforts and looking to upcoming regional meetings to calm the waters after an international tribunal invalidated the legal basis of Beijing's extensive claims in the South China Sea. VOA State Department correspondent Nike Ching has the story.
    Video

    Video Four Brother Goats Arrive in Brooklyn on a Mission

    While it's unusual to see farm animals in cities, it's become familiar for residents of Brooklyn, New York, to see a little herd of goats. Unlike gas-powered mowing equipment, goats remove invasive weeds quietly and without adding more pollution to the air. As Faiza Elmasry tells us, this is a pilot program and if it proves to be successful, the goat gardener program will be extended to other areas of New York. Faith Lapidus narrates.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.

    Special Report

    Adrift The Invisible African Diaspora