The Construction Of The Offshore Financial Market In The Process Of The RMB Internationalization

Countries of the world have witnessed the rapid rise of Chinese economy since 1970s. From the angle of total GDP, China has become the world's second largest economy in 2009. Furthermore, Chinese economy would maintain its rapid growth in both quality and quantity in the foreseeable future. With the development of Chinese economy, China would definitely play a vital role in world economy. Therefore, as one of the important symbols of an economy's international influence, the internationalization of RMB has become increasingly urgent. In recent years, Chinese and foreign scholars made many research on the issue of RMB's internationalization. The internationalization of RMB has become a popular topic in today's academia. Also, many proposals have been made to promote the internationalization of RMB. This thesis analyzes from the difficulties faced by the internationalization of RMB, and then proposed the construction of offshore financial center to alleviate the pressure in the process of RMB internationalization. Finally, some substantial matters about the construction of our country's offshore financial center are analyzed and discussed.This thesis is divided into five parts. The first part makes a brief introduction of the selected topic's background and significance, and a comprehensive analysis on domestic and foreign research papers related to the internationalization of currency and offshore finance.The second part analyzes current situation of and obstacles met by the internationalization of RMB. First, present situation of RMB's internationalization is introduced. On the one hand, a direct analysis is made from the angle of RMB's circulation and circulation structure in neighboring countries and regions; on the other hand, another analysis is made through the arrangement of systems relative to RMB's internationalization and the proposal of policies conducive for the internationalization of RMB. After the introduction of current situation of RMB's internationalization, this article discusses some challenges faced by the internationalization of RMB, including the development level of Chinese economy and structural problems of economic development, incomplete openness of capital accounts, low trade position due to products'structural problems in international trade, the lack of ability and measures to export capital, and so forth. Finally, strategic significance of the construction of RMB's offshore financial center is introduced through the analysis on present situation and obstacles of RMB's internationalization, and then research is proposed about the construction of RMB's offshore financial center.The third part begins with an introduction of the development of Tokyo offshore financial market in 1980s and its effect on the internationalization of JPY. Then a comparison of national condition at the beginning of domestic currency's internationalization is made between China and Japan from the perspectives of economic development condition, state of trade, monetary and financial liberalization situation, development of financial industry, and so on. The illustration of China's backwardness in financial liberalization and capital account opening and their significant role in offshore financial center contributes to a conclusion that the development of Chinese offshore financial market will promote the internationalization of RMB, compared with the situation in Japan. This part also makes a further analysis and introduction on the significance of RMB's offshore in the alleviation of the difficulties in its internationalization.The forth part of this thesis is divided into three subparts, proposing some specific measures for the construction of RMB offshore financial center. First, an analysis of site-selection problem about offshore financial center is made, with an introduction of respective advantages of Hong Kong, Shanghai, and Tianjin in providing offshore financial service. The second subpart analyzes the specific kinds of service which should be supplied on offshore financial market for current China. A difference in offshore service is introduced through an analysis of different conditions between Inland and Hong Kong in various aspects. The final part discusses risks and controlling measures of Chinese offshore financial market. With regard to risk, main risks include credit risk, legal risk, and the risk in capital flow; with respect to risk-controlling, several policies and measures are proposed, such as the strengthening of market access supervision, service regulation, the construction of relative laws and regulations, and so on.