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The present article relies on an original institutional economics perspective of the international monetary system to argue that contrary to what is generally maintained in international relations literature, China's effort to internationalize the renminbi has not stalled after its inclusion in the International Monetary Fund's (IMF) Special Drawing Rights in 2015. This argument rests upon on the evaluation of the global petroleum market as a possible reinforcement of China's establishment of the renminbi as an international unit of account and means of payment through its participation in both fossil and renewable energy markets. To that end, we analyze China's energy-yuan strategy aimed at both fostering renminbi internationalization and securing energy provision. [ABSTRACT FROM AUTHOR]

This article explores the potential impact of China's growing economic capacity on the future of the US dollar in international trade. It examines the relationship between China's economy and its currency, the yuan, and the potential decrease in transactions involving the US dollar. The article emphasizes the importance of understanding this relationship for countries dealing in dollars. It also discusses the historical dominance of the US economy, challenges it has faced, and the causes of the US trade deficit. The article concludes by highlighting the strength of the dollar as a reserve currency and its role in global trade. Additionally, it discusses the competitive advantage of the Chinese economy and the role of the yuan in global trade, as well as the potential negative consequences of the US-China trade dispute. The article recommends supporting international dealings in both the yuan and the dollar, adopting an exchange rate system compatible with a country's economic level, and focusing on comparative advantage and productive projects to enhance competitiveness. [Extracted from the article]

The only central bank money individuals and businesses have today is cash. Everything else they use as money is commercial bank promises. Central bank digital currencies ("CBDC") will likely change all this by putting central bank money into everyone's hands. China is a front runner in this revolution, and its CBDC, the e-CNY, may well in time profoundly affect the international economic order. This article analyses the major considerations around the e-CNY, its ramifications, in particular for trade, and its possible challenges. [ABSTRACT FROM AUTHOR]

Despite the fact that EU-China cooperation relations have enjoyed undeniable success, issues that affect the harmonious development of these relationships have not been delayed. One of the issues affecting EU-China trade relations is the EU's trade deficit. In this context, we want to examine the influence of the Chinese currency depreciation on trade relations with the EU. In this regard, we aim to see if there is a possible link between the EU trade deficit in relation with China and the renminbi depreciation, and for this we applied the correlation method. [ABSTRACT FROM AUTHOR]

Abstract: We introduce a gravity model to the currency choice for cross‐border trade settlement and the Heckman selection model to estimate the impact of the exchange rate on the cross‐border trade settlement of the Renminbi (RMB). We analyse bilateral exchange rates using panel data of China and 182 RMB settlement countries, or areas, from 2009 to 2014. We find that, regardless the choice stage or scale stage of RMB cross‐border trade settlement, the appreciation of the RMB does not necessarily promote RMB cross‐border trade settlement. This result holds when we take geographic differences into account and split the settlement of cross‐border trade into merchandise and service trade. We further investigate the channels through which exchange rate influences the cross‐border trade settlement of RMB, and we find that the appreciation of RMB impedes enterprises from choosing RMB as their settlement currency by reducing the scale of export to RMB settlement areas, whereas it speeds up RMB cross‐border trade settlement by increasing the scale of China's import from RMB settlement areas. We find that China's economic strength supports the development of RMB cross‐border trade settlement. However, the geographical distance between China and the RMB settlement areas may inhibit cross‐border trade settlement in RMB. [ABSTRACT FROM AUTHOR]

China has experienced a rapid integration into Global Value Chains and a decade long appreciation of its exchange rate. However, these trends have been analysed largely in isolation from each other. In this paper, we explore the linkages between the two based on interviews with a sample of firms in Jiangsu Province. We show (1) how the distribution of the costs and benefits of exchange rate appreciation depends on the power hierarchies between firms in GVCs; (2) how exchange rate changes are important drivers of upgrading and even downgrading in GVCs; and (3) that the firm heterogeneity evident in GVCs provides additional insights into the politics of exchange rate determination in China. [ABSTRACT FROM AUTHOR]

This paper revisits canonical thinking on international financial centres ( IFCs) that understands them as being primarily sustained through market liquidity, economies of competition and cooperation between financial and related professional services, and acting as interpretative nodes within global finance. In contrast, I explore the implications of foregrounding questions of power and politics in the (re)production of IFCs. Drawing on the case of the development of offshore renminbi markets in London's financial district, I argue the state plays a vital, yet comparatively neglected, role in shaping the development and changing nature of IFCs. In so doing, the paper calls for work in economic geography and cognate social sciences to understand finance as a political as well as an economic, social and cultural relation. [ABSTRACT FROM AUTHOR]

This article evaluates the implication of renminbi (RMB) internationalization on economic integration between China and its partners, especially for Belt and Road countries. We collected data for all bilateral swap agreements between 2000 and 2016, and empirically explored the role of bilateral swap agreements in the bilateral trade flows between China and its partner countries. We examined the effects in gravity equation and found a significant positive effect of swap agreements on trade. In our benchmark model, the negotiations of swap agreement would improve 30.4% of bilateral trade values between China and its partners. For Belt and Road countries, the effect is even stronger. This effect is both statistically and economically significant. It is also robust for alternative measure of swap agreements and alternative estimation method. We argue that RMB swap agreements are beneficial for the economic integration between China and Belt and Road countries through facilitating bilateral trade. [ABSTRACT FROM AUTHOR]

Anti-China critics argue that the People's Republic of China (PRC or China) engages in a long-standing and intentional pattern of currency manipulation that artificially devalues the Chinese currency, the Renminbi (RMB or "people's currency") versus the U.S. dollar. The devaluation of the RMB makes Chinese goods less expensive to the U.S. consumer as consumers need to exchange fewer dollars for the same amount of RMB used to purchase Chinese goods. The devaluation of the Chinese currency means that China exports more inexpensive goods to the United States and the United States exports fewer to China. This pattern leads to an increase in the U.S. trade deficit with China, which has already reached a massive $365.7 billion in 2015, by the far the largest U.S. trade deficit with any individual trading partner. A trade deficit of this size has many negative consequences for the United States, such as closed factories, lost jobs, and stagnant wages. China's currency manipulation is another instance, according to the anti-China critics, of how China conducts international trade to the detriment of the United States. One anti-China critic, a prominent politician running for high political office in 2016, promises to impose punitive tariffs of 45% on all Chinese imports to offset the effects of China's currency manipulation. Should such a measure become enacted, it would cause shock waves around the world and could possibly plunge the world into a costly trade war between the United States and China with ramifications for every corner of the globe. This article examines the main arguments that China's currency manipulation justifies the U.S. imposition of trade sanctions. A detailed legal analysis reveals that China's currency manipulation violates no legal obligations under the WTO. As a result, the United States cannot lawfully impose trade sanctions on China consistent with the WTO. To continue make this argument when it is not legally viable is risky and even dangerous. It is now time to move beyond such inflammatory arguments that do not present a viable legal remedy against China. The article then argues that a different set of strategies is needed to deal with China's sharp tactics in international trade as exemplified in the United States' recent strategy in creating mega-free trade agreements such as the Trans-Pacific Partnership. [ABSTRACT FROM AUTHOR]

The paper reviews the World Trade Organization's analysis of developments in China's trade policy during 2012-14. The review overlaps with the continuing Great Recession and with China's determination to foster a sustainable rate of economic growth. Developments in the country's trade policy include the launching of the Shanghai pilot free trade zone. China faces a series of trade policy-related challenges including the complex process necessary to internationalise the renminbi. [ABSTRACT FROM AUTHOR]

This paper develops a three-currency model to study the determinants of the demand for assets and liabilites denominated in an international currency and to shed light on the prospects for the renminbi as a budding international currency. We show that interest rate differentials would be only one of the factors shaping the renminbi's position, while other factors, including the correlation between foreign countries' economic growth and their bilateral exchange rates against the renminbi, and the correlation between exchange rates of the renminbi with other international currencies, would also be important. A broad interpretation of these findings is that the renminbi will likely be attractive to investors from high-income economies and fund-raisers from emerging market economies. [ABSTRACT FROM AUTHOR]

In my article, I examine the use of foreign currency in the Democratic People's Republic of Korea (DPRK) border economy since the 1980s. I focus not on the US dollar so beloved of elites in Pyongyang but on the steady uptake of Chinese renminbi by nonelites, a phenomenon that emerged first from the economy of the border region that the DPRK shares with China. Relying on testimony from structured interviews conducted in 2014 with former DPRK citizens now based in the Republic of Korea, I position the expansion of foreign currency usage within the history of contemporary DPRK marketization, specifically linking that expansion to economic shocks felt in 1992, 2002, and 2009. I conclude by discussing the threats and opportunities presented by the rising tide of foreign currency possession and use. [ABSTRACT FROM AUTHOR]

This study identifies 37 central banks that added China's renminbi (RMB) to their reserve portfolio since 2010. Why do some states diversify into new reserve currencies at an early stage while most continue to take a wait-and-see approach? We argue that state preferences regarding international order influence decisions to invest in RMB. While some states support the liberal, US-led status quo, others prefer an emerging Chinese alternative order. We contend that as state preferences for international order move away from the US model (and toward China), the likelihood of diversifying reserves into RMB should increase. Thus, the decision to invest in RMB is not simply an economic choice. It is also a political act that signals and symbolizes a state's preferences for a diminution of American global influence and support for a revised order. Employing new United Nations General Assembly (UNGA) ideal points data, we find that states with larger (smaller) ideal point distance with the United States (China) are more likely to adopt RMB as a reserve currency. Furthermore, political consideration--rather than economic concerns about transaction needs, optimal portfolio considerations, or instrumental calculations--best explains emergent demand for the RMB as a reserve currency. [ABSTRACT FROM AUTHOR]

The article focuses on financial turmoil in China including plunged stock market, Chinese Renminbi devaluation, and drop of Shanghai Stock Exchange (SSE) composite index. Topics discussed include financial reform in China like loosened restrictions on foreign investment and devising macro-economic monetary policies, impacts of stock market volatility on Chinese economy, and internationalization of RMB to boost currency reform for China.

For several years now, China has implemented policies to promote the international use of its national currency, the Renminbi ( RMB). As part of these efforts, the People's Bank of China ( PBC) has negotiated 25 bilateral currency swap agreements ( BSAs) with foreign central banks. These make it easier for firms in both China and its partner countries to settle cross-border trade and direct investment in RMB. We seek to explain why China and these countries cooperate via BSAs. We theorize that trade and direct investment interdependence relate to dyadic BSA cooperation via two mechanisms: financing insulation from international liquidity shocks and reduced transaction costs of cross-border exchange for local firms. Additionally, we expect the presence of preferential trade agreements ( PTAs) and bilateral investment treaties ( BITs) will increase the probability of dyadic BSA cooperation. BSAs are natural extensions of these existing agreements. They represent an additional layer of state-level formal cooperation that further reduces barriers to cross-border trade and direct investment. Our empirical analysis finds that both de facto trade interdependence and de jure economic integration via PTAs and BITs increase the probability of BSA cooperation between China and partners. [ABSTRACT FROM AUTHOR]

A strand of literature has focused on inferring the weights of the anchor currencies in a country’s currency basket. With the growing importance of China’s economy, there has been a surging research interest in the role of the renminbi as an international anchor currency and in China’sde factoexchange rate regime. In this article, we show by a simple model and demonstrate using the observed data on the Special Drawing Rights basket that the correct specification to estimate the weights of anchor currencies in a currency basket is to use the rates of change in exchange rates and to write exchange rates in quantity term. When one is to estimate the structure of a currency basket, close attention should be paid to using the rates of change or the levels of exchange rates as well as writing exchange rates in quantity or price term. [ABSTRACT FROM AUTHOR]

We examine Chinese-US trade flows over the 1994-2012 period, and find that, in line with the conventional wisdom, the value of China's exports to the US responds negatively to real renminbi (RMB) appreciation, while import responds positively. Further, the combined empirical price effects on exports and imports imply an increase in the real value of the RMB will reduce China's trade balance. The use of alternative exchange rate measures and data on different trade classifications yields additional insights. Firms more subject to market forces exhibit greater price sensitivity. The price elasticity is larger for ordinary exports than for processing exports. Finally, accounting for endogeneity and measurement error matters. Hence, the purging the real exchange rate of the portion responding to policy, or using the deviation of the real exchange rate from the equilibrium level yields a stronger measured effect than when using the unadjusted bilateral exchange rate. [ABSTRACT FROM AUTHOR]

This paper utilizes the heterogeneous common factor models to investigate the asymmetric impacts of RMB exchange rate on the exports based on the export data classified by HS 2 digits from January 2001 to December 2008. The results show that the impacts of RMB exchange rate on Chinese exports vary with the exports of processing commodities. The appreciation of RMB will have a negative effect on the exports with small proportion of processing commodities. However, this negative impacts will decrease when the proportion of export on processing commodities increases. This paper also explains why the RMB5s appreciation has a positive impact on Chinese export and a large number of firms find it hard to operate. [ABSTRACT FROM AUTHOR]

The global reserve system can be strengthened by increasing the role of alternative currencies. A gradual evolution to a multicurrency system reduces pressure on a single reserve currency issuer from an ever-growing balance-of-payments deficit. It also allows countries to better diversify their foreign exchange holdings. Given the continuing strong economic growth in the China and its growing influence on the world economy, the renminbi will likely emerge as a new international currency. However, this is contingent on the China accepting a more convertible capital account and developing an efficient financial system. Internationalising the renminbi will likely be a gradual and drawn-out process. Simulations show that, with greater convertibility, the renminbi could gradually become an international currency within Asia and beyond - sharing from 3 to 12 per cent of international reserves by 2035. [ABSTRACT FROM AUTHOR]

Since the collapse of the Bretton Woods monetary order in 1971, the US dollar has successfully maintained its global hegemony despite the US's declining share in the global economy, thanks largely to the US's political-military supremacy. The recent rise of China poses a serious dilemma to the US. On the one hand, China's export-oriented development has provided the US with low-cost manufactured imports and cheap credit. On the other hand, the US's expanding current account deficit, largely attributable to China, has precipitated a crisis of confidence over the dollar's long-term viability. This dilemma explains the US's vacillation in its currency conflict with China over the last decade. China has also been caught in a dilemma. While keeping its currency cheap could help sustain its export competitiveness, it would deepen China's dependence on the US market and Treasury bonds as an outlet for its expanding current account surplus. On the other hand, while a RMB revaluation would facilitate China's long overdue economic rebalancing and reduce its dependence on the US, the resulting unravelling of the long-entrenched export-oriented growth could generate large-scale economic dislocation. No matter how this currency conflict is settled, its final resolution will determine the future of the dollar's global hegemony. [ABSTRACT FROM AUTHOR]

China is often accused of manipulating its currency to gain international competitiveness. Previous studies have tried to address this issue by investigating the impact of yuan depreciation on China’s trade balance. Not only have they failed to establish the link between the Chinese exchange rate and its trade balance with the rest of the world but also between China and her major trading partners. In this article, we consider the China–UK trade balance and disaggregate their trade flows by commodity. Out of the 47 industries considered, we show that the real depreciation has favourable short-run effects in most industries. However, the short-run effects last into the long run only in seven cases. [ABSTRACT FROM PUBLISHER]

The emergence of China as a powerhouse of the world economy has added a new dimension to the global currency market. China’s impressive economic growth and phenomenal rise in exports have given considerable strength to its currency yuan in recent years. To what extent will China push to make the yuan the world’s reserve currency has become a burning issue. Currently, the share of yuan in total world reserves is hardly 1 per cent. The reasons are obvious. The yuan is not fully convertible, the capital market is shallow, the exchange rate is not flexible and international acceptance of yuan as a store of value is non-existent. In the face of these constraints, China is showing an inclination to make the yuan an international currency and to rival the US dollar and euro. Increase in the inflow of foreign direct investment as well as outflow of investment abroad is enabling China to move towards internationalisation of yuan in the near future. Regionalisation of the yuan is gaining importance with rise in its international trade in Asia. China has now allowed the commercial banks in Hong Kong to accept the yuan-denominated deposits. It is further extending loans in yuan to developing countries. Many steps are being taken towards making the yuan an international reserve currency. At the outset, it appears that the yuan would become an international currency in the foreseeable future. [ABSTRACT FROM AUTHOR]

The article discusses the decreasing global value of the U.S. dollar as of 2013 and its potential impact on the United States' international political power. The author begins by explaining the impact of the 2007-08 global financial crisis on the liberal U.S. financial system, and goes on to examine a change in the international balance of power that favors China, as evidenced by its economic development and import growth. Other topics addressed include the International Monetary Fund (IMF), the internationalization of the Chinese Yuan currency, and the decline of the U.S. liberal capitalist culture.

The article examines the strategies employed for managing the Chinese yuan. There are three mains factors to consider when evaluating the national currency. These factors are the government-driven nature of the currency, the use of yuan as the legal tender only in mainland China, and its viability as an international currency. Topics discussed include the international promotion of the Chinese yuan, its increasing use in global trade and its inclusion in the special drawing rights (SDR) basket.

Greater China has been separated and divided for over a century. The reunification of Hong Kong and Macao on the eve of the New Millennium has paved the way for Greater China to reunify as a single economy with a single internationalized currency. History shows that financial and monetary collaborations are essential to the future of Greater China in the global arena. We argue that collaboration might begin with a common board in Hong Kong, Shanghai and Taipei for Greater China enterprises to list and trade in one synchronized market. The common board would also facilitate public and private bonds in support of the infrastructural development and globalization of Greater China enterprises. Due to its established financial market, system and culture, Hong Kong would be the undisputed home of the Greater China Enterprises Board. Financial collaboration would advocate monetary alliance when the Chinese renminbi is fully convertible. When the time comes, the offshore renminbi based in Hong Kong would become the counterpart of the Eurodollar in London. The Asianyuan, as it might be called, would be the truly internationalized and globalized renminbi. [ABSTRACT FROM AUTHOR]

ABSTRACT This article deals with the analysis of the purchasing power parity (PPP) hypothesis in China using fractional integration or I( d) techniques. Using real exchange rates data between the Chinese Yuan and the US dollar, the results indicate that the estimated integration order d is generally larger than 1, which means that the PPP hypothesis in China does not hold in the long run over the sample period January 1994 to November 2010. Moreover, to check the stability of d across the sample period, we reestimated it recursively over different subsample periods with 5-year and 10-year data frequencies, respectively. The recursive estimated results show that after the structural change at the beginning of the sample period, the fractional differencing parameter d remains stable and generally larger than 1. Copyright © 2011 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Discussions on how best to exit from global imbalances to create a more balanced world economy have ignored the impact on poor countries of proposals to redress these imbalances. This paper aims at filling that gap. It gauges the degree of renminbi (RMB) undervaluation; presents evidence on RMB undervaluation and China's GDP growth rate; surveys the role of the real effective exchange rate - both its level and its stability over time - for underpinning growth in developing countries, especially in large dual economies such as China and India; and finally, presents new evidence on growth linkages between China and poor countries for the last two decades and surveys literature on potential displacement effects of RMB appreciation. The analysis allows broad conclusions to be drawn about the potential developing-country beneficiaries and losers from various renminbi adjustment scenarios in the forthcoming years. [ABSTRACT FROM AUTHOR]

The dollar's dominance of international transactions and role as a reserve currency is an exorbitant privilege that is a burden as well as a blessing for the US. It achieved this dominance early in the twentieth century, quite quickly in fact; it may also see that status change equally quickly were the world to move to a multipolar system of currencies. Among the most likely candidates for reserve currencies in such a world are the dollar, the euro, and the Chinese renminbi, Barry Eichengreen explained in his Butlin Lecture earlier in 2011. [ABSTRACT FROM AUTHOR]

The present paper investigates the effect of China's share of US imports on the aggregate-level exchange rate pass-through to US import prices over the period from January 1999 to December 2008. The paper also focuses on the post-reform period, after 2005, allowing greater flexibility of the RMB to explore the change in the role of the Chinese import share in determining the trend in the US exchange rate pass-through. Evidence reveals that China's share of US imports has a negative effect on the exchange rate pass-through. However, this negative effect has been moderated to a negligible level since China's exchange rate reform. An important implication is that the exchange rate flexibility of the RMB has been raised to a significant level may no longer cause distortion in the US competitive environment and prevent the USA from adjusting current accounts. [ABSTRACT FROM AUTHOR]

The present article is a reply to the article by John A. Tatom titled "The US-China Currency Dispute: Is a Rise in the Yuan Necessary, Inevitable or Desirable?," recently published in this journal. We found that John Tatom seems to only give a partial description of the US-Chinese economic relations, of the main features of the Chinese economy, and also of the macroeconomic policy options available to China. We argue that the real exchange rate is not the appropriate measure for a currency undervaluation, but it is the continuous, one-directional and accelerating accumulation of foreign exchange reserves. We also argue that the likely improvement in the US trade balance deficit caused by an appreciating Yuan will not be offset by growing US trade balance deficits with other East Asian countries. Furthermore, giving up the actual currency peg will benefit rather than harm China, provided that the steps towards Yuan flexibility will be taken in the right sequence and order. We hold that a revaluation of the Yuan is necessary, inevitable and desirable just as much as it happened to be with the Deutschmark in 1969. It would not "damage Chinese development." China needs a Yuan appreciation mainly in its own interest to assure domestic financial market stability, and to avoid an overheating of its economy and a soaring inflation. [ABSTRACT FROM AUTHOR]

This paper reviews and assesses the policy debates on the Renminbi (RM13) revaluation issue and the reform of China's foreign exchange rate regime that have taken place both inside and outside China. It focuses on two key issues: the extent of revaluation and its impact on China. The policy debates and the consequent decisions on revaluation indicate that despite continued international pressure, it is unlikely that the Chinese leadership will make any radical changes to the RMB in the near future. Iris reasonable to expect that the Chinese government will continue its gradualist approach, with the long-term objective of achieving a flexible regime. [ABSTRACT FROM AUTHOR]

The article provides information on the significance of giving up the dollar peg of China. The market pressure for a currency appreciation is determined by the increasingly large Chinese trade and account surpluses. Several studies revealed that the rapid and sustained economic growth of the country implies that the equilibrium real exchange rate is appreciating over time and that the renminbi is grossly undervalued. It is suggested that the actual nominal appreciation is required to allow the real exchange rate to move toward its equilibrium value without causing higher inflation. The various risks for its economy from the continuation of the currency regime are also provided.

Since 2003 China has faced increasing pressure, especially from the US and Japan, to revalue the renminbi. In July 2005 China responded by announcing a small revaluation and a switch from a dollar peg to a tightly managed float against a currency basket. The mainstream economic debate, which we briefly review, has focused on whether, and to what extent, the renminbi is undervalued. From a political economy perspective, however, the more interesting question is why China has been so reluctant to significantly revalue the renminbi especially since it was keen to prove itself a ‘responsible member of the international community’ by not devaluing in the wake of the Asian financial crisis in 1997–1998. We argue that this can be explained by three factors. These are, firstly, the diminished ability of China's policy-makers to use the export tax rebate policy to mitigate the effects of a revaluation. Secondly, there are differences in the regional context between the two time periods. Thirdly, in the international game of ‘problem assignment’, China refuses to accept that the US trade deficit is its ‘problem’. [ABSTRACT FROM AUTHOR]

Using a computational general equilibrium model, we analyze the impacts of Chinese real exchange rate appreciation on the trade balance of China and the USA and on various industries of both countries. We use several scenarios with 2.1, 6 and 12 percent real exchange rate appreciations for our simulation analysis. The results indicate that China's exchange rate appreciation might not solve the enlarging US current account deficits. Chinese outputs in both primary and manufacture sectors will increase, whereas the outputs of energy and services sectors will be adversely affected. The price of value-added products declines in light of the renminbi appreciation. (Edited by Zhinan Zhang) [ABSTRACT FROM AUTHOR]