The Study Of RMB Cross-border Circulation And The Influence Factors

In recent years, with the help of the reform and opening up, China’s economy hasmaintained a sustained and stable growth, overall national strength and internationalstatus advance significantly and the value of RMB rises steadily as well. Alongside ofthe promoting of RMB’s international status, RMB circulation increases in theinternational market, especially that the acceptance and recognition in the tradingamong the neighboring countries keep increasing. RMB foreign circulation is theresult of market selection, which suggests that RMB has already begun the process ofinternationalization.Both the analysis of the factors affecting the cross-bordercirculation of RMB by estimating the quantity of RMB foreign circulation and theimpact of RMB cross-border circulation on China’s economy help promoting theinternationalization of RMB. On the basis of summarizing and absorbing a largenumber of research results at home and abroad, this article divided into four partsconducts systematic analysis and research on RMB cross-border circulation and itsinfluencing factors with the method of theoretical analysis and empirical analysis.In the first part, the theoretical basis of RMB cross-border circulation andinternationalization has been analyzed, and the result shows that the RMBcross-border circulation is the beginning of the RMB internationalization and there isstill a long way to go for RMB internationalization. The second part conducts anestimation of the quantity of RMB foreign circulation which estimates the quantity ofRMB foreign circulation from1999to2010with the indirect method. It is found thatthe quantity of RMB foreign circulation shows an upward trend since the Asianfinancial crisis. Based on the former study, the article analyzes the distribution of theRMB foreign circulation, the result of which suggests that the circulation of RMB hasbeen widespread, while the circulation in the international market has yet to beincreased. In the third part, an empirical analysis of the factors influencing the RMBcross-border circulation has been done. From the result, it is found that the economicstrength of China, currency value of RMB, the total volume of foreign trade, and thedomestic price level all have an important impact on the RMB overseas stock. At thesame time, through the analysis of the impact of RMB cross-border circulation onChina’s economy, it is found that overall the impact of RMB cross-border circulationon China’s economy does more good than harm. Finally, the following suggestions have been made to promoting RMB foreign circulation and accelerating the RMBinternationalization:(1) to maintain China’s rapid economic growth rate;(2) to keepthe RMB exchange rate steady;(3) to strengthen the management and monitoring ofRMB cross-border circulation;(4) to promote the participation of RMB ininternational settlement.