Internationalisation of the renminbi: Is China ready to do so?

With the recent State Council's "Shanghai Two Center construction" opinion document issued, Shanghai's International Financial Center, International Shipping Center to accelerate the pace of construction, the promotion of the international status of the renminbi, the pace of internationalization of the renminbi has become the Lujiazui forum participants and scholars focus on the topic.　　Shanghai Municipal Party committee, deputy mayor Tu Guangshao vice-chairman in the Lujiazui Forum during the interview with foreign media, this paper emphasizes the relationship between the construction of International financial center and the internationalization of RMB, and points out that "the construction of Shanghai Financial Center should be compatible with the status of RMB internationalization, and the international status of RMB should be matched with that of Shanghai International Financial Center in 2020 years". "Shanghai Two Center construction" document requirements, speed up the construction of Shanghai International Financial Center and International Shipping Center, the goal is to 2020, Shanghai should be basically built with China's economic strength and the international status of the renminbi to adapt to the international financial Center, the basic formation of domestic and foreign investors to participate in a higher degree　　A multi-level financial market system with complete pricing and information functions. The process of currency internationalization of a country is divided into three stages Tu Guangshao vice-chairman previously pointed out that a country's currency internationalization process can be divided into three stages, trade settlement, transaction pricing and become a reserve currency. With the gradual expansion of RMB in international trade settlement, it is necessary to hold, liquidate and maintain the value of RMB, so that the financial market will be opened to the outside world, so that the RMB can return to the mainland to gain income.　　If the renminbi can be used both for trade settlement and for clearing and trading functions, as well as for hedging through asset management, the international status of the renminbi will continue to increase. On the issue of internationalisation of the renminbi, Professor Wei, a professor of finance and economics at Columbia University, said the US economy overtook the UK in the middle of 19th century, but the dollar did not become a leading international currency until the end of World War II, and took 100 years. So even after China's economy is strong, the renminbi has some way to become the dominant international currency.　　At the same time, there are still many conditions for a country's currency to become an international currency, including the confidence of other investors in the value of the country, the depth and breadth of its financial markets and capital markets, its relatively lax control of basic capital accounts, and the recognition that the currency can be circulated among other investors. "For China at this stage, a fully open capital account may be more risky than cost, not necessarily as a direction for short-term policy changes."　　Professor Wei also stressed. Pan Yingli, director of the Antai School of Economics and Management at Shanghai Jiaotong University, also held a similar view.　　She believes that the financial crisis has brought an opportunity for the internationalization of the renminbi, but China is not ready, the internationalisation of the renminbi is unlikely to be achieved in the short term. First, China's economy still has serious structural contradictions, such as consumption as a share of GDP is too low, investment and exports are too high for GDP, overcapacity and over-reliance on exports, Pan Yingli said. China's economy needs structural adjustment and transformation, so that the proportion of consumption to total demand reaches two-thirds,In this way, the Chinese economy will have a stable growth base. At the same time, economic growth cannot rely too much on resource consumption and must be built on the basis of sustainable development. Second, China needs to have a large, liquid and growing capital market, which is constantly internationalized, and needs to be modernized and internationalized in China's domestic capital markets.　　In addition, China also needs to have a greater push in terms of system construction. The internationalization of RMB should take step-by-step steps William Iber, professor of international economics at Stanford University, Professor Ronald Mackinnon, says the internationalisation of the renminbi should take steps. Japan raised the international yen 15 years ago, but now the world is increasingly using the yen. He suggested that the renminbi should adopt a stable exchange rate regime that would allow it to have a risk cap, in which other countries could be persuaded that the renminbi would not fluctuate significantly; China could also do more to borrow abroad, Reduce the mismatch of international currency, currency and economic mismatch.　　He also said that a mature renminbi bond market is an important prerequisite for Shanghai to become an international financial centre and a prerequisite for the renminbi to become a major reserve currency.　　' Mr. Bindra, Chief Executive officer of Standard Chartered Bank Asia, said investors ' trust in the way the renminbi is managed, the stability of the value of the renminbi and other currencies, and the wide and easy use of the renminbi for international trade are all important to the internationalisation of the renminbi. ' Mr. Bindra said: "In the future, I think there will be more and more renminbi-denominated financial products developed, new financial instruments have been developed, but also must develop a renminbi financial investment platform." Finally, the renminbi can become a reliable reserve currency. Along these lines, the renminbi will increasingly become an international reserve currency. ”