The RMB in the Global Economy

The global role of the RMB has been growing, but it is still under-represented in the global market and its global role does not match China's economic might. The path of RMB internationalization is affected by both China's economic performance and geopolitical factors.

Format: Paperback / softback
Length: 75 pages
Publication date: 08 December 2022
Publisher: Cambridge University Press

The global role of the Renminbi (RMB) has been a subject of significant interest and debate in recent years. After recapitulating its economic and trade growth experiences, we will recount China's evolving exchange rate policy in the post-reform era, review the debate over whether the RMB is overvalued or undervalued, present China's policies to globalize the RMB, describe offshore RMB trading, assess the current global status of the RMB, and discuss geopolitical tensions in the last few years.

Since 2009, the process of globalizing the RMB has not been smooth sailing and has progressed quite unevenly over time. Despite the strong performance in the early 2010s, the RMB is under-represented in the global market and its global role does not match China's economic might. The path of RMB internationalization is affected by both China's economic performance and geopolitical factors.

One of the key challenges facing the RMB's globalization is the lack of trust and confidence in the currency. Many investors and businesses are still hesitant to use the RMB due to concerns about its stability and the potential for government intervention. Additionally, the RMB's exchange rate is still heavily controlled by the Chinese government, which limits its flexibility and makes it difficult for foreign investors to participate in the market.

To address these challenges, China has implemented a series of policies to globalize the RMB. These policies include increasing the RMB's use in international trade and finance, promoting the use of RMB in cross-border payments, and expanding the RMB's exchange rate flexibility. China has also established a number of offshore RMB trading platforms, which allow foreign investors to trade the RMB in a more regulated and transparent environment.

Despite these efforts, the RMB's global role has not yet reached its full potential. The currency is still under-represented in the global market, and its global use is limited by a number of factors, including the lack of infrastructure and the resistance of some countries to adopt the RMB. Additionally, geopolitical tensions, such as the trade war between China and the United States, have further complicated the globalization of the RMB.

In conclusion, the global role of the RMB has been a subject of significant interest and debate in recent years. While China has made significant progress in globalizing the currency, there are still challenges that need to be addressed to fully realize its potential. The RMB's exchange rate is still heavily controlled by the Chinese government, and the currency is under-represented in the global market. However, by implementing a series of policies to globalize the RMB and expanding the use of the currency in international trade and finance, China can continue to promote the development of the global economy and strengthen its position as a global economic power.

Weight: 130g
Dimension: 229 x 152 x 4 (mm)
ISBN-13: 9781009236423