Restraining Factors And Promotion Measures Of RMB Internationalization

Make a general survey on the process of dollar, yen and mark internationalization, the internationalization of currency is a gradual evolving process promoted by natural development of economy and promotion of government,it is one of the important indications of a country that it takes part in financial globalization and its economic development enters a higher phase.Chinese economy develops rapidly after the reform and opening-up, as a developing country,in order to grow faster China must unifies with the trend of international economic development, realizes the RMB internationalization gradually.This paper discusses the restraining factors and promotion measures of RMB internationalization.This paper makes a comprehensive study on RMB overseas circulation and using status according to international currency theory, then studies the restraining factors of RMB internationalization in accordance with currency internationalization and puts foreward the promotion measures at last.This paper is divided into five chapters:The first chapter, introduction. This chapter first analyzes the background and significance of the topic.RMB internationalization is necessary for Chinese economic development and currency competition management under the background of Chinese adaption to economic globalization.Then this chapter summarizes the idea, methods, contents, main perspectives,main innovations and further questions to be solved of this research. The research method is a combination of theoretical deduction and empirical analysis.The main innovation is:making a conclusion that China should manage the impact of international capital flows and prevent the reduction of international reserves caused by overseas investments,outflows of RMB assets and increase of import costs,according to the latest trends that Chinese economic development slows down and the RMB exchange rate changes from appreciation to depreciation.The second chapter, relevant concepts,theories and literature review of RMB internationalization. This chapter gives the definition and makes theoretical review of RMB internationalization;provides theoretical basis and standards for this research by summarizing the conditions of RMB internationalization;reviews the literatures of RMB internationalization development,restraining factors and promotion measure s,provides empirical research basis and theoretical basis of early promotion measures for this study.The focus of this chapter is the conditions of currency internationalization,mainly includes:good international relations and political climate, enough confidence for the currency issuing country's political status;rich economic strength;high proportion in world trade; sound financial system, open monetary policy, highly developed financial market system and currency supervise mechanism; stable currency value and general recognized national currency credit.The third chapter analyses the status and restraining factors of international currency competition;introduces Chinese political development,international political climate and restraining factors;makes a study on the typical example of JPY internationalization process.Takes a look at financial history,there is always a currency which almost tends to dominate and effect the international monetary system,after world ?,dollar replaces pound becomes the universal money,through "core-periphery"frame of the current international monetary system and the inequity between interest and obligation,dollar grabs interest from other countries;the current competition status of international currency is that:though yen and euro challenge the international position of dollar in some degree,dollar still dominants current international monetary system,and all of them suppress the internationalization of yuan together.Recently,America launches "return to Asia" strategy on the political aspect;constructs trans-pacific economic strategy partnership(PPT agreement) and carries out the plan of local industrial adjustment on the economic aspect,therefor new transfer of international industry reduces the export of China,creates overcapacity in the export industry,hinders the promotion of Chinese global economic influence.The internationalization process of yen is the best experience to be drawn.The fourth chapter is the study on economic development and restraining factors of RMB internationalization.This chapter analyzes the conditional fulfillment and restraining factors of RMB internationalization from the aspect of Chinese GPD,international trade,international investment,proportion of foreign exchange reserve and other comprehensive economic strength status,provides specific problems to be solved and empirical supports in the process of RMB internationalization.Though there is a remarkable growth of Chinese economic strength,there is still a large gap between China and developed countries.On the aspect of economy,Chinese supply capacity of low-priced goods brought by the labor-intensive and export-oriented economic development modeljeads to a low level of domestic industrial structure;at the same time,China pulls down the global price and makes world wide impact on the production,export and employment of overseas companies,therefor foreign scholars believe that China exports global "disinflation" and then put foreward "China threaf" theory;foreign countries take the advantage of Chines huge,rapid and continuous expanding demands of energy,row material and semi-finished products brought by the status of "factory of the world",leads Chinese economy to a predicament of "lower interest" and "higher cost", makes a inflation pressure on import;the huge surplus of trade and foreign exchange reserve,external economic,trade,political and other pressures bring about the continuous appreciation of RMB exchange rate,this appreciation leads to the slowdown and proportional drop of export,then larger industrial pressure,more and more reduction even bankruptcy of low value-added export enterprises,outflows of foreign even domestic capital and larger pressure on adjustment and upgrading of domestic industrial structure;outflows of international capital lead to less foreign exchange reserve and reduce the Chinese capacity about coping with international financial crisis.The fifth chapter,financial development and restraining factors of RMB internationalization.This chapter analyzes the conditional fulfillment and the restraining factors of RMB internationalization,provides specific problems to be solved and empirical supports for RMB internationalization process.On the aspect of RMB circulation,RMB is circulating in Hong Kong and surrounding countries of Asia,RMB internationalization enters the primary stage;on the aspect of financial opening-up,current account convertibility of RMB is realized,the control of capital project liberalizes gradually,convertibility of RMB capital account will happen soon;on the aspect of Chinese financial market,PBOC provides clearing arrangement of RMB in Hong Kong and Macau,introduces RMB in currency swap,allows domestic institutions issue RMB bonds in Hong Kong market,sets no limit of domestic RMB deposit for non-residents,practices RMB international trading pricing pilot,the offshore RMB business launches a new stage;on the aspect of stage and depth of RMB internationalization,the overseas RMB uses evolve from serve for consumption and trade mainly to serve for investment mainly,individual countries make RMB as the reserve currency;on the aspect of RMB internationalization system,there is only marketization of deposit interest rate left in the process of interest rate marketization and it will finish soon;the formation mechanism of RMB exchange rate is gradually improved.Though Chinese financial strength grows remarkably,there is still a large gap between China and developed countries,and there are lots of restraining factors of RMB internationalization:low proportion of international RMB settlement,clearing,loan and official reserve;capital account convertibility of RMB still on the way now,RMB still not a universal accepted currency;though there is a huge stock of RMB abroad,there is only a small amount of financial products to be invested for RMB in current international financial market,and market of financial derivatives for avoiding exchange rate risks is far from developed,returns of hot money will rise the price of consumer goods and assets easily, increase the expected inflation pressure increase and apply pressure on further opening of capital project.The sixth chapter,promotion measures of RMB internationalization.RMB internationalization is a systematic engineering relates to a variety of factors,it is necessary to make a make a scientific plan and present steady promotion measures.Positive sovereign currency strategy is the realistic way for realizing RMB internationalization,according to the reality that it is impossible to found a unified currency of Asia--the Asian yuan in a short term,because of the restraining factors of RMB internationalization and the great conditional difference between Asian countries and EU counties.On the basis of the different effects of international trade pricing and settlement, international investment and international reserve in different development phases,this chapter raises specific promotion measures for RMB internationalization against current status and restraining factors of RMB internationalization:On the aspect of international currency competition and international political pressure coping,the main measures are:promotes SRD to be the international single currency,improves international monetary system and disintegrates the domination of dollar with the other countries of the world;takes part in SRD,makes yuan the international reserve currency;promotes Asian regional monetary cooperation,improves regional currency competitiveness and disintegrates the domination of dollar with the other countries of Asia;promotes RMB regionalization,makes yuan the regional core currency of Asia;maintains the stability of RMB value,improves the competitiveness of RMB,makes yuan the forth international currency after dollar,euro and yen.On the aspect of economy,makes RMB international investment as the breach,enriches the varieties of RMB investment.boosts RMB international pricing and settlement;builds multifaceted national industrial promotion mechanism,guides the transform of enterprise management mechanism,practices sustainable economic development strategy which is domestic oriented.Coordinates the development of week power,public service and key industrial by supporting policy;practices western development strategy,coordinates the structure of regional economy;removes the development mold of real-estate depending on land finance,coordinates the structure of commercial,affordable and low-rent housing,maintains stability of RMB value,interest rate and exchange rate; removes the economic promotion policy depend on governmental investment,makes the optimization of the allocation of resources by market economy;enriches the endowment insurance account by the income of state-owed economy,creates a stable environment for the continuous economic development of China;practices more scientific positioning and management of stock market,makes the economic operation more reasonable and steady;guides fiscal funds invest over the high-teched,profitable and key enterprises,improves the capability of independent innovation,promotes the industrial upgrading and international competitiveness of enterprises,makes continuous development of domestic economy;makes a transform of international trade,promotes a resources-saved economic growth,improves the quality of Chinese economic development;makes more overseas investment and foreign exchange reserve structure more reasonable,promotes the balance of international payments.On the aspect of financial business, makes the practice of pushing RMB the settlement and pricing currency of international trade as the breach,builds bidirectional circulation mechanism of RMB issuing,clearineg and transmission in bilateral and multilateral countries' banks;on the aspect of constructing financial institutions,makes the construction of RMB offshore center in Hong Kong and Shanghai as the breach,build overseas RMB circulation channels;on the aspect of financial market development,makes further reform of financial institutions, improves the ability of innovation and operation, efficiency and benefits of financial institutions, improves the quality of financial assets(quantity and quality,stock and increment); on the aspect of supervision,makes effective monitoring on the steps of RMB cross-border flows, clearing,foreign exchange management, financial crisis and others, coordinates the conflicts home and abroad,prevents and eliminates the financial risks caused by RMB disordered circulation through macro-control.Summary and prospect:China is the major developing country with forefront level of economy and trade,great-power status and lots of late-development advantages.If the upgrading of domestic industry and reform of political system are completed successfully, China will make the best of the advantages of economic development and great-power status definitely, China will promote RMB internationalization and make yuan the world's third international currency after dollar and euro,through committing more international obligations and gaining more international recognition.