After a two-year stagnation, China reiterates its efforts to improve the status of yuan in the global financial system.
The central bank and the government are taking a number of initiatives such as the launch of a new phase of an international payment system with extended working time; the facilitation of lending in RMB by foreign creditors, thereby facilitating foreign investment in Chinese shares and bonds; renewing the possibility for investors from mainland China to buy foreign investment in RMB, which was suspended in 2015.
Backed by the growing foreign currency reserves in China and the stability of the yuan, the Chinese authorities are again returning to the objectives of President Xi for a greater role of Beijing in global finances.
By 2005, the value of Chinese currency was fixed to the US dollar. With China’s transition to a market economy and the increase in external trade, the yuan has been devaluated to boost the competitiveness of the Chinese industry. As a result of the rapid internationalisation of RMB, it is the eighth most traded currency in the world in 2013 and the fifth most traded currency in 2015 by about 3 per cent share.
Despite the upward movement, this is still a very small value. For comparison, 43 per cent of international transactions are carried out in dollars and nearly 29 per cent in euros. This drives Beijing to step up its efforts on the international currency market.
The measures are already giving a result and in 2016 yuan will be included in the basket of reserve currencies used by the IMF.
For the success, good economic conditions are also helpful. In May the general index of industrial and service sectors in China remained at the last month level of 52.3 points. This is a signal that the growth of the second largest economy in the world remains relatively stable.
This is taking place at the time of the forthcoming bilateral visit by the Chinese Prime Minister Li Keqiang to Bulgaria, which will be combined with the 7th Summit of the Heads of Government of China-CEEC Cooperation Platform on 7 July 2018.
