chapter  6
19 Pages

Challenges of the internationalization of the Renminbi

China’s economy continued to boom in 2011, and in terms of the scale of economy and the scale of trade, China has become the world’s second largest economy and the biggest exporting country; in respect of the monetary system and economic stability, the degree of commercialization of China’s economy has been constantly improved; economic development is stable; political stability has been achieved; inflation is under effective control; the value of the currency is stable and continues to rise-all these factors have increased the trust of the world in the RMB and the demand for the RMB. Concerning the construction of the financial markets and according to the global financial competitiveness ranking published in 2010, three Chinese cities lined up in the world’s top 11. The upgrading of its competitiveness and the construction of Shanghai as an international financial center provides strong support from the domestic financial markets for the internationalization of the RMB. In addition, the subprime crisis outbreak in the United States in 2008 created a favorable international environment for the internationalization of the RMB. Every round of the financial crisis means that the international economic order and the monetary system faces fundamental changes, and the last crisis made Europe, the United States, and other developed countries experience heavy losses, resulting in the declining status of the USD and euro in the international financial markets. In contrast, China has quickly emerged from the financial crisis and maintained strong economic growth, establishing a good international image, thereby increasing market confidence in the RMB, and providing a rare opportunity for its internationalization.