Rmb Internationalization And Its Path And Strategy Choice

Chinese economy has developed fast during the past 30 years since the reform and opening up. China kept a relatively high economy growth rate and recovered quickly from the financial crisis. Chinese GDP growth rate was 10.3% and GDP increased to 6.04 trillion US dollars, which surpassed Japan and made China the world second largest economy in the year 2010. With the development of Chinese economy, the status and value of Renminbi as well as the pressure of appreciating RMB is increasing, the discussion of RMB internationalization becomes more and more ardently. This paper researches current situation of RMB internationalization and concludes that the degree of RMB internationalization is still low and there are many obstacles and problems during its process. The main problems are: core competitiveness of economy is not apparent; development level of manufacturing industry is low and the products stays at low-end of value chain; structural defect exists in development of high-tech production; financial market is incomplete.RMB internationalization could bring China seigniorage revenues, give an impetus to international trade and foreign investment, optimize exchange reserve structure and promote Chinese status in international arena. However, currency internationalization is a sword with two blades, while it brings China enormous economic benefits, it certainly would bring China challenges such as depreciation of foreign reserve, difficulties of macro-control, decreasing autonomy of monetary policy and Triffin Dilemma. Based on cost-benefit analysis, this thesis shows that RMB internationalization is the corollary of Chinese economic development. The actual conditions to internationalize RMB are as follows: increasing gross economic power and RMB's international status are necessary conditions; stable political situation and good national credit are solid basis; close economic exchanges with neighbor countries and currency swap as well as bilateral settlements are premises; impact on US dollar from financial crisis is an important chance; on a worldwide basis, deepening of economic integration and trend of international monetary system reform are external conditions.Historical experience indicates that Sterling became international currency because of leading edge of Britain's industries, America got absolute advantage in manufacturing industry during two world wars and Breton Woods Systems made it possible that US dollar became international currency, in European Union, capital, human resources and other factors could flow freely and finally make its currency play an important role in international financial system. During the process of RMB internationalization, China couldn't borrow other's experience directly because of different historical and economic conditions, but follow in proper sequence, avoid disadvantages and make full use of advantages. The specific steps are giving full play to macro policy's regulation and control, completing financial system, opening capital account gradually, integrating laws and regulations relative to financial supervision, developing RMB derivatives vigorously, promoting RMB offshore market by using advantages of financial system in Shanghai and Hong Kong, pushing forward currency cooperation in east Asia. This thesis concludes a route of RMB internationalization which is internationalizing RMB in surrounding areas, in Asia and then in the world.