哈佛-人民币国际化（英文版）-2018.5-48页-1mb

RMB Internationalization: Implications for U.S. Economic Hegemony

Core Content

This report analyzes the internationalization of the Chinese renminbi (RMB) and its implications for U.S. economic dominance. It explores the motivations behind China's push for RMB internationalization, the factors that make a currency international, and the progress made so far. The report also discusses the challenges China faces and the potential consequences of RMB internationalization for the global financial system.

Main Views

• China's Economic Rise: China has become the second-largest economy in the world, and its leaders seek to increase its global influence and prestige.
• U.S. Financial Dominance: The U.S. has historically used its financial system as a tool for political leverage, including sanctions and exclusion from international institutions.
• RMB Internationalization as a Strategy: China aims to internationalize the RMB to reduce reliance on the U.S. dollar and to gain more control over global financial norms and institutions.
• Challenges to RMB Internationalization: China's financial system is still heavily regulated, and there is resistance from domestic elites to reform. Additionally, the U.S. has not been passive in its response, and the RMB's progress has slowed due to tightened capital controls.

Key Information

• Political Drivers:

  • Influence and Prestige: A more prominent currency can enhance China's standing in international institutions like the IMF.
  • Security: Reducing dependence on the U.S. dollar can help China avoid being targeted by Western sanctions and financial exclusion.
  • Domestic Reform: Internationalization pressures may drive necessary market-oriented reforms within China.
  • Opportunity: The 2008 financial crisis weakened Western economic credibility, creating an opportunity for China to promote its currency globally.

• Economic Drivers:

  • Trade: An international RMB reduces transaction costs and currency risk for Chinese firms.
  • Commodities: Using RMB for commodity pricing could lower costs and provide more predictability.
  • Borrowing: RMB internationalization allows for more borrowing in RMB, reducing reliance on foreign currency debt.
  • Financial Development: A more international RMB could boost the sophistication and competitiveness of China's financial sector.

• Factors for Internationalization:

  • Market Size: A large domestic economy is essential for a currency to gain international traction.
  • Network Effects: The more widely a currency is used, the more attractive it becomes to others.
  • Financial Markets: Open, deep, and well-developed financial markets are crucial.
  • Currency Stability: A stable currency with low inflation is more likely to be accepted internationally.

• Timeline of RMB Internationalization:

  • 2002: Qualified Institutional Investor (QII) program allowed foreign investment in RMB.
  • 2005: China ended the RMB's peg to the U.S. dollar.
  • 2007-2009: RMB trading band expanded, and the first offshore RMB bonds (dim sum bonds) were issued.
  • 2010: Chiang Mai Initiative (CMI) launched to manage currency speculation.
  • 2011: Direct RMB investment in foreign countries allowed.
  • 2012-2014: Expansion of RMB trading with foreign currencies and increased currency swaps.
  • 2015: RMB was no longer deemed undervalued by the IMF, and the PBOC liberalized the exchange rate.
  • 2016: RMB was added to the IMF's SDR basket, officially becoming a global reserve currency.

• New International Institutions:

  • Belt and Road Initiative (BRI): Aims to increase RMB usage through infrastructure investment and loan denominated in RMB.
  • China International Payment Service Corp (CIPS): A cross-border payment system designed to replace SWIFT and reduce reliance on U.S. financial infrastructure.
  • Asian Infrastructure Investment Bank (AIIB): A competitor to the Asian Development Bank (ADB), aimed at increasing China's influence in global development finance.

• Assessment of Progress:

  • The RMB has gained recognition as a reserve currency but remains a minor player compared to the U.S. dollar.
  • RMB usage in trade with Asian partners has increased, but it is still far from being a dominant global currency.
  • The CIPS system has expanded but has not yet fully replaced SWIFT, and its implementation has been gradual.
  • The AIIB primarily uses the U.S. dollar but has shown interest in using RMB for future transactions.

Implications

• RMB internationalization could reduce the U.S. dollar's dominance and provide China with more influence over global financial institutions.
• If successful, China could dictate financial norms, shape international institutions, and exert more leverage over its trading partners.
• The U.S. has the potential to counter RMB internationalization by improving its economic and political credibility, rather than through sanctions or exclusion.

Recommendations

1. Scale back the weaponization of the global financial system:

   • The U.S. should avoid using financial tools for political purposes to prevent further erosion of its global influence.

2. Predictable budgets and deficit reduction:

   • Reducing the U.S. fiscal deficit and maintaining predictable economic policies can enhance confidence in the dollar and its institutions.

3. Make international institutions more inclusive:

   • Reforming institutions like the IMF to better reflect the current global economic landscape can reduce the appeal of RMB internationalization.

Conclusion

China's RMB internationalization is a strategic move to increase its global influence and reduce dependence on the U.S. financial system. While progress has been made, the RMB still lags behind the dollar in terms of usage and acceptance. The U.S. must respond strategically to maintain its dominance, as the global financial system is not static and could shift in favor of the RMB if the U.S. does not adapt.