A Study On Impact Of Features Of China's Trade Network On The Renminbi Internationalization

In order to address the international financial crisis,prevent the loss of foreign exchange reserves and exchange rate risk faced by international enterprises,China has implemented core measures such as cross-border trade RMB settlement and the development of Hong Kong Offshore RMB market,which marks the official beginning of the process of RMB internationalization.The driving force of international currency is the transactional demand of international trade,and trade development plays a decisive role in the internationalization of a national currency.This paper applies the social network analysis method to illustrate the topological structure of the world trade network,and summarizes the characteristics of China's trade network,analyzes its role in promoting the RMB internationalization,in order to explore the new possibility of RMB internationalization,and provide more targeted measures for the upgrading RMB's status from peripheral currency to central currency.Based on the theory of currency internationalization,this paper analyzes the economic logic between the features of trade network and currency internationalization,and proposes three theoretical hypotheses:(1)The higher the network centrality of a country,the higher the internationalization level of its currency.(2)The higher the strength of a country's network connection,the higher the internationalization level of its currency.(3)The higher the network heterogeneity of a country,the more conducive to promoting the internationalization level of its currency.A country with a high network centrality means that it has a strong control over the network,and a high network centrality helps to enhance the competitiveness of its own industry.Both ways help to enhance the status of trade negotiations,so as to promote manufacturers to choose their own currencies for pricing and settlement in international transactions.The increase of network connection strength can promote the technological progress.of the country and the promotion of the status of global value chain,which is also conducive to the producer's currency pricing.The countries with high network heterogeneity show that the geographical concentration of their foreign trade is low,which is conducive to the stability of foreign trade and internal macro-economy;at the same time,the low geographical concentration means that the externality of trade network can be brought into full play,so as to enhance the network value of currency.It can be seen that the strengthening of trade network characteristics can significantly increase the use scope of a country's currency,thus enhancing the network externality of the country's currency.The theoretical model shows that the currency with high network externality can increase the expected utility of economic subjects,reduce the cost of currency conversion,promote the economic subjects to conduct currency conversion,choose to use new international currency,and then promote the process of currency internationalization.Based on 170 countries and regions around the world,this paper constructs the world trade network,and studies the topological structure of the world trade network and the characteristics of China's trade network by using the method of social network analysis.Then,from the perspective of monetary function,this paper combs the current situation of RMB internationalization,and measures the power distribution of RMB in the global scope with the currency anchor model.The results show that the features of China's trade network are driving factors for the degree of RMB internationalization.Along with the promotion of China's position in the world trade network,the RMB is gradually accepted by more and more countries and regions.Based on the above theoretical model and factual analysis,we construct the corresponding empirical model to further explain the impact of the characteristics of China's trade network on the internationalization of RMB,and verify the research hypothesis proposed in this paper.This paper gets four conclusions:(1)the overall density of the world trade network is increasing,showing the "three pole" community distribution.The characteristics of China's trade network feature the following trends:the declining of the degree of middle center;the increasing of the intensity of network connection;the increasing of network heterogeneity.(2)The world trade network presents a "core-periphery" structure,while the international monetary system presents a "center-periphery" pattern.Although China's position in the world trade network does not match the status of RMB in the international monetary system.Along with the promotion of China's position in the world trade network,the RMB has gradually been accepted by more and more countries and regions,and thus began to fulfill the network externality of RMB.(3)The results of state space model show that the characteristics of China's trade network play a steady and significant positive role in promoting the internationalization of RMB.Among them,since 2005,the strength of trade network has played an increasing role in promoting the internationalization of RMB,while the intermediate centrality and network heterogeneity have played a decreasing role in promoting the internationalization of RMB.(4)The structural vector autoregressive model further verifies the theoretical hypothesis proposed in this paper.At the same time,the results of variance decomposition show that the characteristics of China's trade network have different effects on the internationalization of RMB,and the strength of network connection has a greater positive effect on the internationalization of RMB.To conclude,China's trade network characteristics are better than United States,Germany,Japan and other developed economies,and it is gradually becoming an important supporting force for RMB internationalization.However,the internationalization of RMB is still at a low level,and the internationalization of various functions is also uneven.In order to make full use of China's central position in the world trade network,so as to promote the RMB from the peripheral currency to the central currency in the international monetary system,it is necessary to constantly optimize the characteristics of China's trade network,expand the network externality of RMB by enhancing China's influence in the world trade network,and then build a solid foundation for the internationalization of RMB.