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

Taliban's New Leader Says Jihad Will Continue

Top US Afghan diplomat also meets with Pakistani, Afghan officials following news of Mullah Omar's death More

Video US Landmark Pushes Endangered Species

People gathered in streets, on rooftops in Manhattan to see image highlights that covered 33 floors of Empire State Building More

World’s Widest Suspension Bridge Being Built Over Bosphorus

Once built, Yavuz Sultan Selim Bridge will span 2 kilometers with about 1.5 kilometers over water, and will be longest suspension bridge in world carrying rail system More

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.
Astronauts Train Underwater for Deep Space Missionsi
|| 0:00:00
...    
🔇
X
George Putic
July 30, 2015 8:59 PM
Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Astronauts Train Underwater for Deep Space Missions

Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Civil Rights Leaders Struggled to Achieve Voting Rights Act

Fifty years ago, lawmakers approved, and U.S. President Lyndon Johnson signed, the Voting Rights Act of 1965. The measure outlawed racial discrimination in voting, giving millions of blacks in many parts of the southern United States federal enforcement of the right to vote. Correspondent Chris Simkins introduces us to some civil rights leaders who were on the front lines in the struggle for voting rights.
Video

Video Booming London Property a ‘Haven for Dirty Money’

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Hometown of Boy Scouts of America Founder Reacts to Gay Leader Decision

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.
Video

Video 'Metal Muscles' Flex a New Bionic Hand

Artificial limbs, including the most complex of them – the human hand – are getting more life-like and useful due to constant advances in tiny hydraulic, pneumatic and electric motors called actuators. But now, as VOA’s George Putic reports, scientists in Germany say the future of the prosthetic hand may lie not in motors but in wires that can ‘remember’ their shape.
Video

Video Russia Accused of Abusing Interpol to Pursue Opponents

A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.
Video

Video 'Positive Atmosphere' Points Toward TPP Trade Deal in Hawaii

Talks on a major new trade agreement among 12 Pacific Rim nations are said to be nearing completion in Hawaii. Some trade experts say the "positive atmosphere" at the discussions could mean a deal is within reach, but there is still hard bargaining to be done over many issues and products, including U.S. drugs and Japanese rice. VOA's Jim Randle reports.
Video

Video Genome Initiative Urgently Moves to Freeze DNA Before Species Go Extinct

Earth is in the midst of its sixth mass extinction. The last such event was caused by an asteroid 66 million years ago. It killed off the dinosaurs and practically everything else. So scientists are in a race against time to classify the estimated 11 million species alive today. So far only 2 million are described by science, and researchers are worried many will disappear before they even have a name. VOA’s Rosanne Skirble reports.
Video

Video Scientists: One-Dose Malaria Cure is Possible

Scientists have long been trying to develop an effective protection and cure for malaria - one of the deadliest diseases that affects people in tropical areas, especially children. As the World Health Organization announces plans to begin clinical trials of a promising new vaccine, scientists in South Africa report that they too are at an important threshold. George Putic reports, they are testing a compound that could be a single-dose cure for malaria.
Video

Video 'New York' Magazine Features 35 Cosby Accusers

The latest issue of 'New York' magazine features 35 women who say they were drugged and raped by film and television celebrity Bill Cosby. The women are aged from 44 to 80 and come from different walks of life and races. The magazine interviewed each of them separately, but Zlatica Hoke reports their stories are similar.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.

VOA Blogs