20240429 Calibre April 2024 Investor Presentation.pdf
Politics of China's Currency Internationalisation: Renminbi
1. The Politics of China’s Currency
Internationalisation: Regional Renminbi
Hubs
China at a Cross-Roads, DIIS Conference
Dr. Winnie King
king.winnie@gmail.com
University of Bristol
2016
2.
3. Restructuring with Chinese
Characteristics
Assessing nature of what ‘Crossroads’ China is
facing necessitates understanding:
• Why does China do what it does?
• What are China’s concerns?
• Where does the market come in?
• Government Intervention vs Market Mechanisms
• What can it offer?
• What can we expect?
• Re: Currency and Capital Flows
• RMB hubs as a lens of explanation
4. Motivations
(Why does China do what it does?)
Currency Internationalisation in Economic Restructuring
& Macroeconomic rebalancing
• Lessons of 2008 GFC Diversification of Risk;
Economic Structure; Dollar Hegemony
• Supporting Development Strategy (restructuring
economy [supply-side reform], access to resources,
right kind of infrastructure, right kind of investment )
• Security Considerations of Growth and Diplomacy
(aid & alliances; securing resource and access (One
Belt One Road))
5. Risks (What are China’s concerns?)
Risk of Currency Internationalisation in Economic
Restructuring & Macroeconomic rebalancing
• Vulnerability of capital accounts flows (Responding to
2008; learning from 1998 Asian Financial Crisis)
• Regulations and governance of monetary policy
• Currency management (stability)
• Ignoring this in the face of changing economic context:
• Rising cost of labour: up 60% since 2009;; middle income trap; inequality
• Rise of alternative destinations for investment and growth in
China’s ‘traditional’ labour intensive manufacturing sector: ASEAN
6. RMB Hubs:
Where does the market come in?
and What does it offer?
Traditional preference for government intervention over the
market mechanisms
• Strong historical, ideological and socio-economic roots
But reform necessitates a greater role for the market
• RMB hubs as strategically selected infrastructure
• -- for Traditional Economy and New Economic
Sectors
• -- for Currency Internationalisation
• -- as a testing ground
• The political and economic logic onshore/offshore rationale
8. It’s all about liquidity: RMB as
readily available currency
9.
10. Contribution to New Economy
• Niche—Cross-Strait Trade &
Investors (Greater China
politics)
• Resource Pooling
(deepening integration)
• Development and expansion
of new financial instruments
and tools (Formosa Bond)
• ODI
• Institutionalisation of
regional financial networks,
collaboration and
cooperation on regulations,
laws, normal practice
• Niche—world financial centre
(expertise; time zone; innovation)
• Upgrading of China’s Financial
System and beyond (‘13-5’)
• Resource Pooling
• Funding [PBoC bond (2015); RMB
denominated UK govt debt
(2014)]
• Greater Transparency
• RMB denominated debt
• ODI/FDI (‘13-5’)
• Taiwan London
11.
12. Currency Internationalisation and
State Legitimacy (What can we expect?)
Rebalancing Economic Structure (‘13-5’)
Securing and Expansion of Renminbi Market Access
(Onshore/Offshore ‘Connect’)
• Transformation both China’s and Hub’s asset holdings
• Shift between government intervention and allowing
market to dominate
• August 2015
• Managing expectations (domestic and international)
• Improved communication
• Win-Win under a ‘New Normal’more opportunities,
more volatility, slower profits, maturing management