A Study Of The Impact Of China’s Outward Foreign Direct Investment On The Internationalization Of RMB

In 2016,China officially joined the basket of currencies,and the international influence of the RMB has increased significantly.Scholars at home and abroad agree that foreign trade has played a major role in promoting the internationalization of the world’s major currencies,but in recent years,with the covid-19 pandemic,frequent trade barriers and geopolitical shocks,our country’s foreign trade shows a relatively weak upward trend,and the growth may slow down in the future.It is not enough to rely only on foreign trade to drive Internationalization of the RMB.It is necessary to continue to develop new drivers of Internationalization of the RMB.With the proposal,implementation and improvement of the "going out" strategy,China’s foreign direct investment shows an overall increasing trend,and the momentum is developing rapidly.Looking back at the internationalization of major world currencies like the dollar,euro and pound,it is not difficult to find that the main driving force of the internationalization presents a trend from foreign trade to outward foreign direct investment.Draw on the experience of the internationalization trend of the world’s major currencies to clarify the relationship between China’s foreign direct investment and the internationalization of RMB are important for our country to shake off the hegemony of the US dollar,respond to the changes in the international situation and steadily achieve the goal of Internationalization of the RMB.At the same time,it is helpful for our government to deal with the international financial risks,stabilize the stickiness of RMB,and achieve the goal of Scientific,normative,stable and controllable RMB.Using a combination of theoretical and empirical methods,At first,it analyzes and summarizes the current situation of foreign direct investment and RMB internationalization.Combined with relevant theories,this paper explains that foreign direct investment plays an important role in promoting the internationalization of RMB.Then,with reference to the relevant literature,it concluded the main path of our outward foreign Direct Investment effects Internationalization of the RMB.Then,the empirical method is used to confirm the positive effect of OFDI on Internationalization of the RMB,and the mechanism of the impact of OFDI on Internationalization of the RMB is established.OFDI affects Internationalization of the RMB through the cross-border trading capacity of RMB is the main path,and Internationalization of the RMB through the cross-border reserve capacity of RMB is the secondary path.Finally,the paper give some policy suggestions according to the empirical results.In the process of RMB internationalization,we should attach importance to the role of OFDI,play a dual role of OFDI and international trade,raise the reserve capacity of the renminbi and the level of financial markets.They are important to raise the level of Internationalization of the RMB.