BEIJING, June 30 (Xinhuanet) -- The internationalization of the renminbi will not only benefit the Chinese economy, but also help stabilize global finance. During a recent speech at the China-UK Financial Forum, Tian Guoli, Chairman of the Bank of China, pointed out that the internationalization of the renminbi would play an important role in stabilizing global finance.
Renminbi is qualified to go global
Currently, China ranks second in economic aggregate and first in trade volume. In cross-border trade, the use of the renminbi will benefit both China and its trade partners. According to Tian Guoli, in 2013, China's GDP represented 12.4 percent of the world total and its foreign trade amounted to 11.4 percent of the world total, which indicates that the renminbi now qualifies as an international currency.
Statistics released by the People's Bank of China show that in the first quarter of 2014, the net outflow of the renminbi from China reached 340 billion yuan, which further complemented the liquidity of the off-share renminbi; the off-shore renminbi deposit balance was 2.4 trillion yuan, making up 1.5 percent of the world's total off-shore deposits; newly-issued off-shore renminbi bonds increased 160 percent on a year-on-year basis; and off-shore renminbi trade volume doubled from the fourth quarter last year.
As one of the fastest growing economies in the world, China has strong economic power and huge foreign exchange reserves, which will support the renminbi going global.
Renminbi wins trust for its strong performance
According to Tian Guoli, "Over more than ten years, the renminbi has become an important force in stabilizing global finance." During the 1997 financial crisis in Asia, Southeast Asian countries all devalued their currencies to cope with the situation. China publicly undertook that the renminbi would not depreciate, and this posiiton lent confidence to other countries. During the 2008 financial crisis, the renminbi did not depreciate - on the contrary it continued to appreciate, shouldering the responsibility to stabilize the world economy. Along with the growing economic and trade exchange between China and other countries, the demand for settling accounts in renminbi and avoiding exchange rate risks continues to grow.
The renminbi has become a recognized currency because of its performance during the international financial crises, and it is widely trusted by neighboring countries and regions.
Currently, the internationalization of the renminbi is still at an early stage. Li Daokui, Director of the Center for China in the World Economy of Tsinghua University, sees the internationalization of the renminbi as a long-term task. We should take pragmatic and steady steps toward the goal and integrate it with financial reform in China.
(Source: People's Daily Online)