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on september 5, huang qifan, academic advisor of the china finance 40 forum and former mayor of chongqing, delivered a keynote speech on the internationalization of the rmb at the 6th bund financial summit.

huang qifan said that in recent years, the process of rmb internationalization has accelerated, but overall it still does not match the status of the chinese economy in the world economy. in the future, there is still a lot of room for rmb internationalization and a lot of work to be done.

he said that my country's promotion of rmb internationalization is to maintain the stability of the global industrial chain and supply chain. whether rmb can become a world currency depends on the needs of world economic development.

there is still a lot of work to be done on rmb internationalization

huang qifan said that in recent years, the internationalization of the rmb has made significant progress. in particular, as the interest rate gap between the rmb and the us dollar has widened in recent years, the comprehensive index of rmb internationalization has risen instead of falling, and the rmb has made significant progress in payment and settlement, investment and financing, pricing, and reserves.

according to swift data, in december 2023, the proportion of rmb in global payment settlement reached 4.14%, up nearly 2 percentage points from the same period in 2021, and it is currently the fourth largest payment settlement currency. in terms of reserve currencies, the latest special drawing rights (sdr) currency basket of the international monetary fund (imf) will officially take effect from august 2022, and the weight of rmb in it will be increased from 10.92% to 12.28%.

huang qifan said that more and more overseas market players are considering using rmb as a financing currency and for trade with china. "as my country's rmb swap arrangements and clearing network become increasingly sound, more and more chinese companies choose to use rmb for outbound direct investment when they 'go global', and more and more domestic industrial and commercial enterprises tend to use rmb as the contract pricing currency in international trade."

"these developments are very encouraging. but we must also be clear-headed and see that there is still a lot of room for the internationalization of the rmb and a lot of work to be done," said huang qifan.

at present, china is one of the three major hubs of the global value chain (china, the united states, and germany), and the largest trading partner of more than 140 countries and regions in the world. in 2023, the total export of goods reached 23.77 trillion yuan, accounting for 14.2% of the global export market share, and has maintained its position as the world's largest trading country for seven consecutive years; the total import volume was 17.99 trillion yuan, accounting for 10.6% of the global share, and has been ranked second in the world for many consecutive years. the source of imports covers more than 200 countries and regions in the world. moreover, my country is a major global investor, and its outbound investment has been the second largest in the world in the past two years.

huang qifan believes that behind these data are huge demands for international payment settlement, investment and financing, trade pricing and currency reserves. the central bank report shows that by the first quarter of 2023, the internationalization index of the rmb in my country will be only 3.26. during the same period, the indexes of major international currencies such as the us dollar, euro and pound were 57.68, 22.27 and 7.66 respectively.

promoting the internationalization of the rmb is to maintain the stability of the global industrial chain and supply chain

"whether it can become a world currency depends on the needs of the development of the world economy." huang qifan said that with the deepening development of economic globalization and the further improvement of china's level of opening up to the outside world, the breadth and depth of china's exchanges with the world will be further expanded, the renminbi will be increasingly accepted by more and more economies and market players, and the internationalization process will also be enhanced.

he further analyzed that from the perspective of the global currency structure, it can be roughly divided into three categories: the first category is the us dollar, which is the world currency. the us gdp accounts for 25% of the world, but nearly 50% of international payments are denominated and settled in us dollars, and the proportion of the us dollar in global foreign exchange reserves is close to 60%.

the second category is the euro, pound, yen, etc. the proportion of the economies corresponding to these currencies in the world economy is roughly equivalent to the proportion of these currencies in the global market. the third category is other economies, whose currency status is far lower than the global share of gdp.

"china is already the world's second largest economy, with its gdp accounting for 17% of the world's total in 2023. however, the renminbi, as a settlement currency, accounts for only a few percentage points in global payments and clearing; as a reserve currency, it accounts for only a few percentage points of the world's total." huang qifan said that in the future, the internationalization of the renminbi must at least achieve a status equivalent to that of the euro, pound sterling and yen, and be equivalent to china's share in the world economy.

huang qifan also stressed that the process of rmb internationalization is an inevitable choice for the more open development of china's economy, and is necessary to maintain the stability of the global industrial chain and supply chain. china needs a strong currency to build a financial power, but this kind of strength should match the stage of its own economic development and serve the real economy, rather than becoming a tool to breed asset bubbles, harvest the wealth of other countries, and impose sanctions on other countries at will.

accelerate the construction of offshore rmb market

the "decision" adopted at the third plenary session of the 20th cpc central committee held in july this year proposed to promote high-level financial opening-up, steadily and prudently advance the internationalization of the rmb, and develop the rmb offshore market.

huang qifan suggested that the internationalization of the rmb can be promoted steadily, prudently and solidly from the following aspects: first, continue to promote china's cross-border trade to be denominated and settled in rmb; second, continue to improve services and provide cross-border rmb settlement services for new business forms and models such as cross-border e-commerce; third, continue to expand opening up and provide more convenient investment and financing services for "bringing in" and "going out"; fourth, promote convertibility under the capital account after reaching a certain status.

regarding the development of the offshore rmb market, he mentioned that hong kong, singapore, london and other countries have become major offshore rmb markets, among which hong kong is the world's largest offshore rmb center. next, we must continue to play hong kong's role as an offshore rmb center, further enrich rmb products, and provide better targets for offshore rmb investment and financing. at the same time, the rcep region is also one of the most active regions for cross-border use of rmb, and promoting the use of rmb in the rcep region is also an important direction for the construction of the offshore rmb market.

"convertibility under the capital account is an important direction for expanding financial openness, but achieving this goal requires the rmb to obtain its due status." huang qifan said that promoting free convertibility under the capital account is the inherent meaning of expanding financial openness and building a financial power. in recent years, relevant departments have done a lot of work around convertibility under the capital account and have made a lot of progress, but the internationalization of the rmb and free convertibility under the capital account are related and different.

"free convertibility under the capital account does not mean that the internationalization of the rmb will be a natural outcome. on the contrary, only when the internationalization of the rmb reaches a certain level can it be a necessary condition for free convertibility under the capital account. this is actually a trade-off between financial openness and security. when the level of internationalization of the rmb reaches a level commensurate with china's position in the world economy, the necessary conditions for freer convertibility under the capital account will be met," said huang qifan.

(this article comes from china business network)